Philippines: As peso slumps, BOP widens to 7-month high in Jun 17 – 19 Jul 2017

  • The Philippines posted its widest deficit in balance of payments (BOP) in Jun 17, explaining that the peso sank to record-levels in Jun 17, the Bangko Sentral ng Pilipinas (BSP) reported on 19 Jul 17.
  • BOP swung to a deficit of USD569mn in Jun 17, nearly 10 times more than May 17’s figures and was a reversal of USD418mn in surplus in Jun 16. It marked also the widest deficit since Nov 16.
  • In 1H17, the country’s BOP remained on the negative at USD706mn in deficit, also reversing a surplus of USD634mn in 1H16. The year-to-date level is already wider than the USD500mn deficit forecast for 2017. BSP revised the outlook in May 17 from a USD1bn surplus.
  • The BOP’s performance is indicative of the peso’s, which has dropped to 11-year-low in Jun 17. Since the Duterte administration took power on 30 Jun 16, the peso has weakened by 7.2% until end-Jun 17, owing primarily to large imports and outflows in the financial markets.
  • Analysts said there is nothing to worry since large capital imports are already expected with the Duterte government’s large-scale infrastructure program. Long-term sources of foreign exchange such as remittances from overseas Filipinos also remained strong.

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