The peso fell to a six-year low Thursday, losing P0.10 to close at 47.64 against the US dollar, as investors pulled out funds from emerging markets.
It was the local currency’s weakest level since closing at 47.73 a dollar on Nov. 3, 2009, at the height of the global financial crisis. Total volume traded reached $971 million Thursday.
“Asians [were] totally beaten down today with crude oil prices continuing to remain at multi-year lows. Stocks are being sold off in a big way with foreigners exiting from positions, hurting respective Asian currencies,” Nicholas Antonio Mapa, research officer at the Bank of the Philippine Islands, said in an electronic mail.
Mapa also said that the “Jakarta bombing and terrorist attack did not help,” in financial markets’ trading.
ING Bank Manila economist Joey Cuyegkeng earlier said the peso would likely be on the defensive this week.
“Local corporate demand for US dollar may increase this week. Market remains on guard of possible and eventual weakening of CNY [Chinese yuan], continued concerns on growth and low commodity prices and ahead of this week’s set of FOMC speakers,” Cuyegkeng said.
Data from Bangko Sentral ng Pilipinas showed that hot money or foreign portfolio investments posted a net outflow of $599.69 million in 2015, or almost twice the $310-million net outflow a year ago, triggered by investors’ anticipation of interest rate hike in the United States and slowdown in China’s economy.
The US Federal Reserved decided to increase interest rates on Dec. 17, 2015.
“While net cumulative inflows reached $1.8 billion during the first two months of 2015, these were fully offset by net outflows in the succeeding months [except for the small net inflow of $28 million in October,” Bangko Sentral said in a statement Thursday.
Gross inflows reached $19.926 billion in 2015, lower than $21.796 billion in 2014, while total outflows dropped to $20.525 billion from $22.106 billion.
“The bulk [$18.6 billion or 90.5 percent] of total outflows represented withdrawals from interim peso deposits, which were for capital repatriation, $14.7 billion from PSE-listed securities; $3.4 billion from peso government securities and $51 million from peso time deposits; and remittance of earnings, $395 million from PSE-listed securities, $78 million from peso GS, and less than $1 million from peso time deposits,” Bangko Sentral said.
Registered portfolio investments were mostly in PSE-listed securities at 77.5 percent and peso government securities at 21.7 percent.
The United Kingdom, the United States, Singapore, Luxembourg and Hong Kong were the top five investor countries in 2015.
Foreign portfolio investments are overseas funds that are temporarily invested in local stocks, government securities and money market. These are also called “hot money” because of the ease they are invested in and taken out of the local markets.