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Today Bangko Sentral ng Pilipinas (BSP) reported the latest data on foreign portfolio investments.

In June 2008 foreign portfolio investments reached a net outflow of USD 145.6 million compared to a net inflow of USD 871.41 million in June 2007. For the first six months of 2008 foreign portfolio investments increased to a net outflow of USD 417.4 million compared to a net inflow of USD 2.552 million in the first six months of 2007.

About USD 466 million or 79% of the registered gross foreign portfolio investments inflow in June 2008 went to shares listed in the Philippine Stock Exchange (PSE), while only USD 279 million or 38% of the capital repatriation come from withdrawls of investments in PSE listed shares.

These lastest figures confirm that the inflow of “hot money” from foreign fund managers came to an end in the face of worsening risk profiles in emerging markets.

The United Kingdom, United States and Singapore remained the top three investor countries and collectively contributed 67% of investment funds during the first six months of 2008.

Today the Monetary Bord of Bangko Sentral ng Pilipinas (BSP) increased the key interest rates by 50 basis points. The interest rate for the overnight borrowing or reverse repurchase (RRP) facility was raised to 5.75% and the interest rate for overnight lending or repurchase (RP) facility was raised to 7.75%.

It the press release the central bank reaffirmed that in accordance with its mandate inflation control is the foremost priority of the BSP. The BSP’s baseline forecasts show the risk of inflation exceeding the inflation targets for 2008 and 2009. Price pressures have increased even as they are projected to ease starting late 2008.  Second-round effects have set in, as evident in the rise in core inflation. 

Additionally BSP raised its inflation estimate to a range of 9% to 11% today. Inflation may peak at 12% this October. In June inflation rate was already reported at 11.4%.

On June 5th the central bank already raised their key interest rates by 25 basis points. The next meeting of the Monetary Board is scheduled for August 28th, 2008.

Today the National Statistics Office released the latest consumer price index (CPI) in Manila.

The year-on-year inflation jumped to 11.4% in June 2008 compared to 9.5% in May 2008. This is the highest inflation rate since May 1994 when inflation reached 11.5%. While the annual inflation rate rose to 9.2% in the National Capital Region (NCR), prices in Areas Outside the National Capital Region (AONCR) even accelerated by 12.3% in June 2008.

Excluding selected food and energy items, core inflation increased to 6.6% in June compared to 6.2% in May 2008. Prices for food, beverages and tobacco (FBT) rose by 16.5%, while services increased by 9.9% and fuel, light and water (FLW) increased by 7.6%

On June 5th, Bangko Sentral ng Pilipinas (BSP) raised its key interest rate by 25 basis points to curb inflation and to support the Philippine Peso, who lost more than 17% against the Euro and nearly 10% against the US Dollar.

On July 17th, the Philippine central bank, Bangko Sentral ng Pilipinas (BSP), will hold its next regular monetary policy meeting.