Philippine banks buck controls on ¿hot money¿

Manila (Philippine Daily Inquirer/ANN) - The banking sector is not keen on the idea of imposing controls on the entry of foreign ¿hot money,¿ saying such measures could scare off investors.

According to Bank of the Philippine Islands president Aurelio Montinola III, the banking sector supports the current policy stance of the Bangko Sentral ng Pilipinas (BSP or central bank) on foreign capital inflows.

That the BSP said it was not inclined to impose controls on entry of foreign capital was welcome news to industry players, he said.

¿People will be concerned if there would be talks of capital controls,¿ Montinola said on Wednesday.

Questions on whether the BSP will restrict entry of foreign portfolio investments arose amid projections by some economists that foreign ¿hot money¿ to the Philippines and other emerging Asian economies may suddenly surge within the short term.

This is because of the prolonged debt crisis in the eurozone that is seen prompting foreign portfolio investors to transfer funds to emerging economies in Asia, where yields are higher.

Data from the BSP showed that the net inflow of foreign portfolio investments reached US$963 million in July, more than triple the $302 million registered in the same month last year.

Last month, the BSP issued a regulation prohibiting foreign funds from being invested in the central bank¿s special deposit account (SDA).

Central bank officials, however, said the regulation was not meant to restrict entry of foreign portfolio investments.

The move was only meant to make the SDA facility perform its main function, which is to siphon excess liquidity in the domestic economy.

This means that only excess cash of Philippine residents should be accommodated by the SDA facility, a high-yield deposit account.

BPI¿s Montinola said the ruling on the SDA was acceptable, agreeing that the BSP was merely fine-tuning the rules governing SDA investments.

BSP officials said imposing controls on entry of foreign capital entails the risk of a significant drop in the short-term investments.

They said growth in foreign portfolio investments was essential as this helps develop the country¿s capital markets.

However, too much of it could destabilize the economy.

This is because a surge in foreign portfolio investments could cause the peso to suddenly and significantly appreciate.

Loading...

Editor’s note:Yahoo Philippines encourages responsible comments that add dimension to the discussion. No bashing or hate speech, please. You can express your opinion without slamming others or making derogatory remarks.

  • North Korea fires missiles in anger at South-US military drills
    North Korea fires missiles in anger at South-US military drills

    North Korea fired two missiles into the sea on Monday and vowed "merciless" retaliation as the US and South Korea kicked off joint military drills denounced by Pyongyang as recklessly confrontational. The annual exercises always trigger a surge in military tensions and warlike rhetoric on the divided peninsula, and analysts saw the North's missile tests as a prelude to a concerted campaign of sabre rattling. "And if there is a particularly sharp escalation, we could see the North …

  • Militants want US Marines pulled out of Negros
    Militants want US Marines pulled out of Negros

    The militant group Bagong Alyansang Makabayan (Bayan) is calling for the pullout of US Marines who arrived in Sagay City, Negros Occidental last Wednesday to train Special Action Force (SAF) commandos and members of the allied forces. The SAF commandos and the allied forces will secure the Asia-Pacific Economic Cooperation (APEC) ministerial meeting in this city. Bayan-Negros secretary general Christian Tuayon said the US troops might violate the human rights of activists, especially those …

  • Couple married 67 years holds hands in final hours together
    Couple married 67 years holds hands in final hours together

    FRESNO, Calif. (AP) — After spending 67 years together as devoted husband and wife, there was no question how Floyd and Violet Hartwig would end their lives — together. …

  • Hijacked Indonesian vessel found in Davao
    Hijacked Indonesian vessel found in Davao

    An Indonesian cargo vessel that was hijacked a month ago in North Sulawesi, Indonesia has been found stuck in the waters off Mati, Davao Oriental, the Philippine Coast Guard (PCG) reported yesterday. PCG spokesperson Armand Balilo said the PCG- Southeastern Mindanao district was informed on Feb. 23 that the M/T Rehoboth was found aground off Barangay Cabuaya. Four personnel from the local PCG district office were sent to verify the report. The vessel was reportedly hijacked by …

  • China subs outnumber US fleet – admiral
    China subs outnumber US fleet – admiral

    China is building some “fairly amazing submarines” and now has more diesel- and nuclear-powered vessels than the United States, a top US Navy admiral told US lawmakers on Wednesday, although he said their quality was inferior. Vice Admiral Joseph Mulloy, deputy chief of naval operations for capabilities and resources, told the House Armed Services Committee’s seapower subcommittee that China was also expanding the geographic areas of operation for its submarines, and their length of …

  • Pacman mega fight tax exemption up to Congress, BIR
    Pacman mega fight tax exemption up to Congress, BIR

    Malacañang is leaving it up to Congress and the Bureau of Internal Revenue (BIR) to consider a proposed special tax exemption for boxing icon Manny Pacquiao in his much-awaited fight with Floyd Mayweather. Deputy presidential spokesperson Abigail Valte said yesterday it will have to be discussed by Congress because lawmakers are the ones who enact tax exemptions, special or general. Pacquiao has been dogged by unsettled tax obligations with the BIR. …

  • Binay backs house arrest for JPE, GMA
    Binay backs house arrest for JPE, GMA

    Vice President Jejomar Binay yesterday supported proposals to put Sen. Juan Ponce Enrile and former President now Pampanga Rep. Gloria Macapagal- Arroyo under house arrest. “Government prosecutors are opposing house arrest for… Enrile. Binay issued the statement after the 91-year-old Enrile was rushed to the Makati Medical Center on Thursday due to pneumonia. House arrest for him would be the compassionate thing to do,” he added. …

  • Military steps up offensive vs BIFF, Abu Sayyaf
    Military steps up offensive vs BIFF, Abu Sayyaf

    Armed Forces of the Philippines (AFP) chief Gen. Gregorio Pio Catapang Jr. has ordered the sustained campaign against the Abu Sayyaf and the Bangsamoro Islamic Freedom Fighters (BIFF) following the successive offensives against the armed groups last week. A total of 24 Abu Sayyaf bandits and two soldiers were killed in recent clashes in Sulu last week. The Joint Task Group Sulu has received information that Abu Sayyaf leader Radulan Sahiron was wounded during one of the encounters but this is …

POLL

Should Aquino be held accountable over the Mamasapano operations?

Loading...
Poll Choice Options