Peso up on ‘hot money’ data


THE PESO strengthened slightly versus the dollar on Thursday following the release of data showing net hot money inflows in October.

The local unit closed at P48.115 versus the dollar on Thursday, rising by 1.5 centavos from its P48.13 finish on Wednesday, data from the Bankers Association of the Philippines showed.

The peso opened Thursday’s session at P48.11 versus the greenback. Its intraday best was at P48.08. On the other hand, its weakest showing was at P48.12 per dollar.

Dollars traded went up to $575.71 million on Thursday from $565.27 million the previous day.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the peso rose versus the dollar after the Bangko Sentral ng Pilipinas (BSP) on Thursday released data on net foreign portfolio investments.

“The peso was stronger after the strongest net foreign portfolio investments data in nearly two years for the month of October at $439.5 million, the first net inflow in eight months,” Mr. Ricafort said in a text message.

A trader said the data caused increased demand for peso.

More foreign portfolio investments entered the economy than what left it in October, suggesting signs of improving investment sentiment in the local equities market.

Foreign portfolio investments — also called as “hot money” due to the ease by which these funds enter and exit an economy — posted a net inflow of $439.46 million, data from the Bangko Sentral ng Pilipinas (BSP) showed.

The October tally is a 320% surge from the $104.53 million in net inflows logged in the same month in 2019 and is a reversal from the net outflow worth $493.65 million in September.

Hot money yielded a net inflow for the first time in eight months or since the $40.06 million in February. It is also the highest net inflow since the $762.82 million seen in January 2019.

However, year to date, foreign portfolio investments posted a net outflow of $3.943 billion, climbing by 221% from the net $1.225 billion that left the country in the first 10 months of 2019.

The BSP expects hot money to yield net inflows worth $2.4 billion this year and $3.5 billion in 2021, respectively.

For today, Mr. Ricafort sees the peso moving from P48.05 to P48.15 versus the dollar, while the trader expects a narrower range of P48.10 to P48.15.

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