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.

  • ‘Next leader must not be newbie’
    ‘Next leader must not be newbie’

    Vice President Jejomar Binay believes the next president of the Philippines must have vast experience and a long track record in governance and in dealing with crises. “I am very much convinced that the local government is the best training ground for those who want to run for national government positions,” he said. Binay said he is determined to run for president in 2016 on the strength of his competence and track record. …

  • Massacre suspect tests negative for poisoning
    Massacre suspect tests negative for poisoning

    A suspect in the Maguindanao massacre case who had been examined at the Philippine General Hospital (PGH) tested negative for poisoning, medical records released yesterday showed. However, the Quezon City court handling the multiple murder case resolved to isolate Police Officer 1 Pia Kamidon from the rest of the accused detained at Camp Bagong Diwa in Taguig for his safety. In a two-page order, Regional Trial Court Branch 221 assisting Judge Genie Gapas-Agbada ordered jail officials to …

  • ‘Homework first before Facebook’
    ‘Homework first before Facebook’

    President Aquino elicited laughter from students here as he reminded them to open books first before Facebook. “Finish your assignments first before making a raid in the Clash of Clans,” Aquino said, referring to a popular online game. In a speech during the turnover yesterday of two new three-story buildings at the Tarlac National High School, he said the government could only provide opportunities for learning but the rest of the work would be up to the students. The new school buildings …

  • Espina resignation confirmed; Noy looks for replacement
    Espina resignation confirmed; Noy looks for replacement

    President Aquino ended speculations yesterday and confirmed that Deputy Director General Leonardo Espina had indeed resigned as officer-in-charge of the Philippine National Police. As of this time, we are conducting various interviews and checks on the various candidates,” Aquino told reporters at the Tarlac National High School in Tarlac City. Aquino had kind words for Espina, saying that he stood by and defended the 44 slain police Special Action Force (SAF) commandos in the operation in …

  • Palace welcomes G7 concern over sea reclamation
    Palace welcomes G7 concern over sea reclamation

    President Aquino welcomed yesterday the Group of Seven industrialized countries’ expression of concern over rising tension in the West Philippine Sea and South China Sea, calling it a clear indication of the global scope of the problem ramped up by China’s massive reclamation activities in disputed waters. In Tarlac City where he led the turnover of new classrooms, Aquino told reporters that goodwill and not tension must prevail in the West Philippine Sea and South China Sea, where territorial …

  • DepEd, TESDA tie up for K to 12
    DepEd, TESDA tie up for K to 12

    The Department of Education (DepEd) has partnered with the Technical Education and Skills Development Authority (TESDA) in the first two years of implementation of the K to 12 program. “We will use TESDA centers as technical-vocational laboratories for senior high school,” DepEd Secretary Armin Luistro said during the inauguration of 30 new classrooms at the Tarlac National High School yesterday. The classrooms were constructed in partnership with the Philippine Amusement and Gaming Corp. …

  • SE Asia Stocks-Philippine falls on foreign selling; others flat to weaker

    BANGKOK, April 17 (Reuters) - Southeast Asian stock markets ended flat to weaker on Friday as Philippine stocks slid on selling led by foreign funds and Singapore shares extended losses with investors ... …

  • Philippine Airlines parent says back in black
    Philippine Airlines parent says back in black

    Philippine Airlines' parent firm said it had returned to profitability, the first time in three years either entity reported being in the black for an entire year. In a filing with the Philippine Stock Exchange Thursday, PAL Holdings reported an after-tax net profit of 129.74 million pesos ($2.93 million) in its fiscal year to December 31. …

POLL

Should Aquino be held accountable over the Mamasapano operations?

Loading...
Poll Choice Options