BSP expects narrower payments surplus this year

The Philippine balance of payments surplus will narrow down to $8 billion this year, from $14.4 billion in 2010, as foreign capital flows into the country won’t be as much as last year’s inflow, the Bangko Sentral ng Pilipinas said Wednesday. "This year the prognosis was for foreign capital to continue to be directed at emerging markets, but likely at levels not as high as they were last year," Bangko Sentral Gov. Amando Tetangco Jr. said during an economic briefing at the Dusit Thani Hotel in Makati City. The payments position — the sum of the country's foreign exchange earnings, minus its foreign exchange expenses — should remain in surplus this year between $6 billion to $8 billion, Tetangco said. Still, the flow of foreign capital continue toward emerging markets including the Philippines that the country's gross international reserves will range this year between $68 billion and $70 billion. The country’s international reserves is currently at $63.3 billion — enough to pay for 10 months worth of imports compared with the international norm of three months. Because of more foreign reserves, particularly US dollars, the peso — which last year gained 7 percent against the US currency — will remain strong, but not strong enough to significantly affect Philippine exports and the money sent home by overseas Filipino workers. Officially, market forces will be allowed to determine the peso-dollar exchange rate and official participation — a euphemism for central bank intervention — will only be resorted to from time to time “to smoothen peso volatility," Tetangco said. — VS, GMA News