MANILA — The Bangko Sentral ng Pilipinas said on Thursday the country might see further surge in foreign portfolio investments amid the possibility that the triple-A credit rating of the United States would be downgraded.
BSP Governor Amando Tetangco Jr. said negative developments in the credit status of the United States could prompt foreign investors to shift their funds toward emerging economies, such as the Philippines, and away from the world’s biggest economy.
Consequently, the central bank chief said, the peso could appreciate some more throughout the year.
“We [Philippines and other emerging markets] could be impacted by possible shift [of portfolio investments] to our markets as EMs are seen to continue to be the global growth drivers,” Tetangco told reporters.
Tetangco gave the statement when asked about his view on the potential impact on the Philippines of the credit-rating problem of the United States.
Moody’s Investors Services has issued a statement saying the US credit rating, which has been triple-A since 1917, is now under review.
The rating could be downgraded if the US Congress fails to pass a bill stretching the US government’s debt ceiling from the current $14.3 trillion. Without the immediate passage of the bill, the United States is expected to miss out paying some of its maturing obligations this year.
“Market will be carefully watching how US lawmakers would handle this warning from Moody’s,” Tetangco said.
The BSP issued a report on Thursday, saying that net inflow of foreign portfolio investments surged to $2.36 billion in the first half, up by a steep 245 percent from $687 million in the same period in 2010. INQUIRER