The country’s balance of payments (BOP) recorded a $5-million surplus on the month of October, data from the Bangko Sentral ng Pilipinas (BSP) showed on Tuesday.
The BOP surplus for the month was lower compared to the $465-million surplus recorded in September. The October surplus was also lower than the $604 million recorded in the same month last year.
The BSP data also showed that cumulative surplus from January to October this year amounted to about $3.83 billion, lower than the $6.44-billion surplus recorded in the first 10 months of 2012. The BOP was a surplus of $9.2 billion last year.
“BOP surplus for the first 10 months of the year continued to be supported by sustained foreign-exchange inflows from OFWs [overseas Filipino workers]and portfolio flows. The surplus for the month was due principally from BSP’s foreign-exchange operations,” BSP Governor Amando Tetangco Jr. said in a text message.
In October, foreign portfolio investments, also known as “hot money” recorded the highest net inflow at $969 million.
Tetangco added that the monetary authority remains watchful of developments abroad, particularly shifts in investor sentiment arising from the future actions of the United States Federal Reserve on the tapering of its $85-billion a month quantitative easing program.
The BSP governor also assured that the central bank will continue to watch market conduct to ensure volatilities in the exchange market are not excessive.
The BOP summarizes the country’s economic transactions with the rest of the world during a period. It consists of the current account, the capital account, and the financial account. A surplus arises when inflows are greater than outflows, while a deficit is incurred when outflows of dollars exceed the inflows.
The central bank has said that the country is still on track to meeting the projected $4.4-billion BOP surplus this year.
A deficit in the BOP causes a drop in the country’s gross international reserves (GIR). The GIR are foreign assets that are readily available to and controlled by the central bank for direct financing of payments imbalances, and for managing the magnitude of such imbalances.
GIR consists of holdings of gold, special drawing rights, foreign investments and foreign exchange, including Reserve Position in the Fund. These assets are valued mark-to-market. Higher GIR helps prop up the peso and keeps domestic inflation at bay.
As of end-October, the coun¬try’s GIR level slightly declined to $83.4 billion, while inflation for the same month picked up to 2.9 percent, below the 3-percent to 5-percent target band of the BSP for 2013.