Bangko Sentral to revise 2010 BOP surplus target

The central bank is again set to revise the country's balance of payments (BOP) position forecast, confident that the projected surplus would be breached this year.

Bangko Sentral ng Pilipinas (BSP) Gov. Amando Tetangco Jr. said over the weekend that monetary authorities will review the revised BOP surplus projection of $3.7 billion set in April, and come up with a revised target.

"We will be reviewing the numbers and releasing the updated projections by November," Tetangco said.

He attributed the widening of the surplus to strong foreign exchange inflows – higher foreign commercial borrowings of the national government, increased remittances from overseas Filipino workers (OFWs), and robust earnings of the business process-outsourcing (BPO) sector.

The BOP measures the difference between foreign exchange inflows and outflows representing the country's transactions with the rest of the world I n a given period.

BSP data showed that the country's BOP surplus climbed 22.2 percent to $3.326 billion in the first seven months of the year from $2.722 billion in the same period last year due to strong investment inflows and higher OFW remittances.

In April, the BSP's Monetary Board said the 2010 BOP surplus would amount to $3.7 billion from the original target of $3.2 billion.

The country's BOP surplus narrowed to $89 million in 2008 from $8.67 billion in 2007 as international trade shrunk from global financial crisis.

The BOP position recovered last year with a surplus of $5.295 billion.

The strong foreign exchange inflows, Tetangco clarified, would not necessarily put more pressure on the peso that continued to strengthen against the US dollar.

Tetangco said the BOP surplus would continue to give the peso a fundamental support in the foreign exchange market.

"The exchange rate is affected by many things. It can also be affected by what is happening to the US dollar, investors' sentiments, then when there's news about global economic recovery. You see it is responding to a lot of different factors. But BOP surplus will give the fundamental support," Tetangco said. —JE/VS, GMANews.TV

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