The balance of payments (BOP), or what is left of the country’s foreign currency earnings minus its foreign currency expenses, stood as a surplus of only USD238 million in the first three months this year, sharply lower than the year-earlier surplus of USD3.5 billion.
The sharp reduction, the Bangko Sentral ng Pilipinas (BSP) said, was traced to lower net outward flow of investments in the financial account component of the BOP even though the imbalance or deficit position of the current account component, which tracks the net flow of services and goods, moderated to a deficit totaling USD1.7 billion in 1Q this year from a deficit totaling USD4.4 billion last year.
The financial account balance stood as a net outflow of investments totaling USD4.9 billion in 1Q this year or USD1 less than year-earlier outflows of USD5.9 billion. According to the BSP, far more foreign direct investments as well as portfolio or speculative investments exited the country than had entered during the period. Net outflows were similarly reported in the financial derivatives and other investment components of the financial account, the BSP added.
Still in all, the country’s stock of foreign currency reserves, important in servicing the country’s maturing foreign obligations as and when they mature, barely changed during the period at USD104.1 billion in 1Q this year from USD103.8 billion a year ago.
The exchange rate of the value of the local currency, the peso relative to the US dollar, strengthened to P55.96 per dollar in 1Q this year from only P56.06 percent dollar last year. This means the Philippines was better able to meet its foreign currency obligations as and when these matured during the period with a relatively stronger peso than was prevailing a year earlier.
