Foreign funds flowed into the Philippines in May, breaking a streak of net outflows in the previous two months. The Bangko Sentral ng Pilipinas (BSP) provided less hawkish signals, boosting investor confidence in relaxed financial conditions.
According to data from the BSP released on Friday, there was a net inflow of $43 million in foreign portfolio investments in the local stock and bond markets in May. These funds, known as “hot money,” are quick to leave in times of trouble and are influenced by both domestic and international developments.
The BSP hinted at possible rate cuts in August, as inflation was expected to ease in the coming months. This prompted more investment in listed firms and peso government securities. The Philippines recorded a net inflow of $108 million in hot money for the year so far, a significant improvement from the $805 million net outflows at the same point in 2023.
Major investments in May came from countries like the United Kingdom, the United States, Singapore, Luxembourg, and Norway. Despite this positive trend, $1 billion in short-term foreign funds left the country in May.
The BSP anticipates a total net inflow of $3.1 billion in hot money for the year, surpassing the $2.7 billion inflow in 2023.
