The Philippine balance of payments (BOP) registered a shortfall in August largely on declining gold prices, Bangko Sentral ng Pilipinas said Thursday.
Central bank data showed a $318-million BOP deficit last month, the first gap on record since February when the position reflected a $960-million deficiency.
The August payments position pulled the eight-month tally to $3.359 billion, down 33.87 percent year- on-year.
In a text message Thursday, Bangko Sentral Deputy Governor Diwa Guinigundo said the shortfall in August was “due to gold monetization and revaluation of gold.”
Since hitting a record high in 2011, gold prices have declined by 30 percent as of
Volatility in financial markets caused by bets the US Federal Reserve will taper its $85-billion bond purchases further weighed on the precious metal – which suffered from profit-taking since 2012 as investors chased other investments.
With gold prices on the weak side, the central bank opted to sell some of its holdings, listed Security Bank Corporation's economist Patrick Ella said in a phone interview.
“This simply means that they sold off some gold,” he said.
BOP is the summary of transactions between the Philippines and the rest of the world. A surplus means Philippine gained more money in its external dealings,
beefing up its ability to pay-off foreign obligations.
A surplus in the BOP builds up the foreign exchange reserve, which cushions external shocks. Bangko Sentral is targeting a $4.4-billion surplus this year.
“We remain confident [that] we will hit our target BOP position of more than $4 billion,” Guinigundo said.
Ella said hitting the target is not a problem, citing the Fed decision to keep its massive stimulus program intact, which drove portfolio investments back to emerging markets like the Philippines, as well as strong structural inflows – specially remittances.
“I don't think that there will be a reason for a BOP deficit this year. We will definitely see a region-wide reversal,” he said. – VS, GMA News