US tariffs anxiety partly offset by PH gray list exit, RRR cut
Foreign portfolio investments or “hot money” flows in January recorded a net outflow of $283.69 million, narrowing sharply, or by 41.8 percent, from the net outflow of $487.37 million posted in December 2024, central bank data showed.
The Bangko Sentral ng Pilipinas (BSP) said January’s net outflow resulted from a gross outflow of $1.602 billion against a gross inflow of $1.319 billion.
Portfolio investments — also called “hot money” because of the ease with which these funds are moved in or out of the country by investors perceiving any favorable or unfavorable local conditions — came mostly from these countries in January: the United Kingdom, Singapore, the United States, Ireland and Luxembourg.
They collectively accounted for 89 percent of the total hot money inflow, the BSP said.
For January, the gross inflows reached P1.319 billion, 25 percent or $263.56 million more than the $1.055 billion gross inflows in December 2024.
Of the January inflow, 67.9 percent came in peso government securities and 32.1 percent in PSE-listed securities of banks, property, transportation services, holding firms and the sector consisting of food, beverage and tobacco.
“The primary sources of these investments were the United Kingdom, Singapore, the United States, Ireland, and Luxembourg, which collectively accounted for 89.0 percent of the total,” the BSP said.
Gross outflows for January reached $1.602 billion, an increase of 3.9 percent from the $1.542 billion recorded in December 2024.
The United States remained the top destination for the outgo, with $559.27 million.
On a year-on-year basis, portfolio investments in January 2025 were higher than the $1,235.39 million recorded in January 2024 by $83.64 million or 6.8 percent.
Gross outflows for the month also increased by $291.51 million, or 22.2 percent compared with the $1.311 billion in January last year.
The $283.69 million net outflow in January 2025 was higher than the net outflow of $75.83 million during the same month last year.
Anxiety over US tariffs
Michael Ricafort, RCBC chief economist, said the January outgo may still be attributed to the Trump factor “as the markets priced in possible higher US import tariffs, trade wars and other protectionist policies that would lead to slower global trade, investments and overall global and local economic growth.”
Ricafort said the Philippines’ exit from the Financial Action Task Force (FATF) gray list last week and the reduction of banks’ reserve requirement ratio (RRR) may be the offsetting positive factors.
“The exit, after more than three years, could attract more foreign investments into the country. The latest BSP cut in banks’ RRR could lead to lower intermediation costs and increase banks’ lending and other investing activities,” Ricafort said.
He said these developments would support market sentiment and could increase investor confidence in the country.
Last year, “hot money” recorded a net inflow of $2.1 billion, more than offsetting the $248.84 million net outflow recorded a year earlier, the BSP said.
This means more portfolio investments came in last year than in 2023.
