Over $700 Million in ‘Hot Money’ Exits the Philippines in 10 Months

The Philippines has experienced a significant net outflow of foreign investments, also known as ‘hot money,’ amounting to $714.98 million from January to October this year. This reversal from last year’s net inflow of $305 million has been attributed to factors such as elevated inflation and persistent high interest rates, dampening investor sentiment. The Bangko Sentral ng Pilipinas (BSP) reported a three percent decrease in gross inflows, amounting to $9.89 billion, and a seven percent increase in gross outflows to $10.96 billion for the same period​​​​.

In October alone, the Philippines saw a net outflow of $328.19 million, continuing the trend from September’s $698.01 million net outflow. The majority of the inflows, around 60.5 percent, were directed towards securities listed on the Philippine Stock Exchange, with the remaining 39.5 percent invested in peso government securities. The UK, US, Luxembourg, Singapore, and Hong Kong were the primary sources of these investments​​​​.

Furthermore, the gross outflow of speculative funds surged by 34.4 percent to $1.28 billion in October, with the US being the primary destination for these outflows. This trend occurred amid an off-cycle 25-basis-point rate hike by the BSP in October, aimed at stabilizing inflation expectations. The BSP has since revised its net hot money inflow target downwards for this year and the next​​​​​​.