More “hot money” left the country in March

Dollar and pound banknotes are seen in this photo taken on April 28, 2017. — REUTERS

MORE SHORT-TERM alien Investment left the Philippines as what occurred in March rebottleect increased uncertainty due to the Russia-Ukraine war and monetary policy tightening in the United States.

Data from Bangko Sentral ng Pilipinas (BSP) showed that foreign portfolio investment, or “hot money,” yielded a net outflow of $305.08 million in March, down 43.6% from the $540.97 million a year earlier net offbottleoh a year earlier.

However, that was a reversal of the $274.04 million in net incomebottleoh in February.

March hot money net outflows largest in 8 months

The March net outflow was also the largest since July 2021’s $339.7 million.

The net outflow of foreign portfolio investment reflected volatility in international markets since the Russia-Ukraine war broke out in late February, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in a Viber message.

The Federal Reserve’s tightening of monetary policy may also have led to more hot money being withdrawn from the Philippines, he added.

The US Federal Reserve raised interest rates by a quarter of a percentage point last month as part of its fight against decades of highsbottlenation. The Fed is expected to hike rates by 50 basis points at next week’s meeting, Reuters reported.

Asian Institute of Management economist John Paolo R. Rivera said investors were also at riskonwards Mood ahead of national elections on March 9

“This may reflect investor sentiment regarding the upcoming political landscape as a new government is on the verge of entering. This can be againbottledepending on the market and investor sentiment on the policy,” he said in a Viber message.

Former Senator Ferdinand R. Marcos, Jr. remains a front-runner in pre-election polls, but a Bloomberg poll showed that analysts and investors favor Vice President Maria Leonor G. Robredo as the country’s next president.

GNP data showed Gross InbottleHot cash flows rose 55% to $1.277 billion in March from $824.23 million a year earlier.

The top five investing economies for the month included the United Kingdom, United States, Luxembourg, Singapore and Hong Kong, which accounted for 78.4% of foreign portfolio investmentbottleOuch

Most of the investment went into holding company securities; Property; banks; Food, Beverage and Tobacco; and transportation services. The remainder was invested in Treasury Peso bonds.

Meanwhile, gross outflows rose 15% to $1.582 billion in March from $1.365 billion a year ago.

In the first quarter, Hot Money resulted in a net outflow of $16 million, down 96.6% from $483 million a year earlier.

International developments and risk-oonwards Sentiment as the election approaches is likely to continue to worry foreign investors, Mr Ricafort said.

“In the coming months, more aggressive rate hikes by the Fed, the more than two-month-long conflict between Russia and Ukraine, some lockdowns in China and election-related uncertainties could be headwinds for the recovery of the local economy and financial markets,” he said.

The BSP expects hot money to bring a net inflow of $4 billion in 2022. — Luz Wendy T. Noble

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