ASEAN KEY DESTINATIONS
Capital inflows to make decisions more difficult
However, the net amount of portfolio flows or hot money in terms of fundamentals flows including exports, remittances, revenues from business process outsourcing and other services receipts are not large enough.
"At least not yet; hence, much of the exchange rate movement cannot be primarily ascribed to these short-term flows," Guinigundo said.
Data from the central bank showed that transactions in foreign portfolio investments surged to $3.446 billion as of November 18 compared with the $372.02 million in the same period last year.
"I believe the BSP has done the right things so far. We have allowed the exchange rate to absorb the shocks, we have taken the opportunity to build our gross international reserves and, in the process, help temper sudden, prolonged and large swings in the peso movement," Guinigundo said.
"We continue to do mopping up operations to reign in the liquidity impact of these FX flows," he added.
Domestic liquidity or M3 picked up in September to reach P4.1 trillion, or 10.5 percent faster than the 8.6 percent in August, while bank lending continued to grow albeit at a slower pace of 9.8 percent in September compared with 12.5 percent in August.
Guinigundo also brushed aside speculations that a price bubble is forming in thae equities and real estate sectors.
"The peso's real effective exchange rate indicates continued external competitiveness. Most important, we have enjoyed robust economic growth in an environment of price stability," he said.
The BSP official said that monetary authorities have enough tools to handle the current pace of capital flows aside from the conventional monetary tools.
Banks' exposure to the real estate sector was capped and holding period of non-resident deposit was also enforced.
Letters that do not contain full contact information cannot be published.
Letters become the property of AseanAffairs and may be republished in any format.
They typically run 150 words or less and may be edited
submit your comment in the box below