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BSP to revise upwards forex reserves forecast

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MANILA - The Bangko Sentral ng Pilipinas will revise upwards this year's forecast for the country's gross international reserves.

On the sidelines of the Philippine Economic Briefing, BSP Governor Amando M. Tetangco Jr. said the revision forms part of the central bank's review of its balance of payments assumptions.

The country's foreign exchange reserves climbed to $80.8 billion in the first eight months of the year, well above the BSP's full-year forecast of $78 billion.

At end-July, the Philippines' BOP surplus already hit $4.498 billion, higher than the full-year forecast of $2.6 billion.

The review of the central bank's BOP assumptions comes as the Philippines enjoys huge inflows of foreign portfolio investment - so-called "hot money" - brought about by the weakness in advanced economies, leading investors to search for yields higher than are available in those markets.

The BSP registered hot money inflows of $1.3 billion last month, 41.8 percent lower than in July and 6.6 below that in August of last year. Portfolio outflows reached $868 million, resulting in net inflows of $387 million last month, 60 percent lower than the $963 million in July and 1.7 percent below the $394 million in August 2011.

The strong foreign fund inflows has caused the peso to hit four-year highs against the US dollar.

With a report from Krista Angela M. Montealegre

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