OPINION | Hot money: Short-time love [By Amelia H. C. Ylagan] READ:
ot money’ outflows slow in July,”The Bangko Sentral ng Pilipinas collated reports by authorized agent banks of transactions on short term foreign investments showing a net outflow of $103.14 million in July. This was 70% lower than the $342-million net outflows recorded in June, and the $339.7 million in net outflows in July 2021.
Net outflows mean more “flighty” foreign funds exited the country than those that stayed. The net outflows of $103 million in July must be worrisome for the BSP, who “expects hot money to yield a net inflow of $4.5 billion in 2022,” according to thestory that leads this column.
While the rate hikes were initiated to help the US domestic economy, higher interest rates are nevertheless likely to impact emerging markets, the Oxford Business Group says. The interest rate hikes increase the cost of servicing US dollar-denominated debt for emerging markets, lead to a depreciation of their currencies, weaker demand for exports in the US, and potential outflows of capital from lower-income economies.
Headline inflation in the Philippines was 6.3% in August, from 6.4% in July 2022, after five consecutive months of acceleration .
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