RCBC chief economist Michael Ricafort
MANILA – An economist forecasts a sustained rise of the country’s balance of payment (BOP) surplus which rose to USD6.88 billion in end-September, benefiting the peso and the foreign reserves.
The Bangko Sentral ng Pilipinas (BSP) on Monday reported that BOP surplus last September amounted to USD2.1 billion, higher than month-ago’s USD657 million surplus and year-ago’s USD38-million surplus.
The surplus in the first nine months this year is also higher than year-ago’s USD5.57 billion.
The BOP refers to a country’s total transactions with the rest of the world in a given period. A surplus results if a country exports more than it imports, among others.
In a report, Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort traced the rise of the BOP surplus to narrower trade deficit due to slowdown in imports because of the pandemic, proceeds of foreign borrowings by both the government and the private sector, increase in foreign investments in the country and sustained inflows of remittances, revenues of the business process outsourcing (BPO) sector, and other income from abroad.
Ricafort said the increase in stock market and bond prices in the US and other countries also boosted the Philippines’ BOP position since it increased income from foreign investments of both the Philippine government and other local residents.
These factors are expected to continue supporting the country’s BOP position in the coming months and in turn boost both the country’s foreign reserves or the gross international reserves (GIR) and the peso.
“Going forward, the sustained BOP surpluses may lead to new record high GIR well above USD100 billion in the coming months, thereby providing greater cushion/support/buffer for the peso exchange rate vs. the US dollar especially vs. speculative attacks,” he said.
The local currency is currently trading at 48-level against the greenback, which Ricafort said is near its four-year high against the US dollar. (PNA)
