Philippine Hot Money Posts Third Month of Net Inflows but Stays $3.94 Billion Down for the Year

Foreign portfolio investment in the Philippines is improving month by month and remains badly in deficit for the year, and both statements come from the same Bangko Sentral ng Pilipinas release.

Registered foreign portfolio investments — commonly called hot money — posted a net inflow of $66.47 million in July, sharply lower than the $742.56 million recorded in the same month last year and 60.9% below June's $170.12 million.

It was nonetheless the third consecutive month of net inflows.

The cumulative picture is where the damage sits. From January to July, registered foreign investments recorded a net outflow of $3.94 billion, reversing a net inflow of roughly $2.25 billion in the same period of 2025.

The composition

The monthly detail shows why the net figure has compressed to near zero.

Gross inflows fell 4.1% year on year to $2.37 billion in July, and were down 19.5% from June's $2.94 billion. Gross outflows rose 33.2% year on year to $2.3 billion, though they were 17% below June's $2.77 billion.

In other words, money leaving nearly matched money arriving. By instrument, securities listed on the Philippine Stock Exchange registered a net inflow of $86 million while government securities recorded a net outflow of $20 million.

Union Bank chief economist Ruben Carlo Asuncion said the reversal reflected greater caution among foreign investors toward riskier emerging-market assets amid heightened global uncertainty, with overall withdrawals outweighing new placements this year.

Jonathan Ravelas, senior adviser at Reyes Tacandong & Co., took a longer view, saying the Philippines remains fundamentally attractive but that portfolio flows will continue to ebb with global risk appetite, and that the macroeconomic story remains intact.

The context around it

The flows data lands in a week when other Philippine indicators have been moving against the country.

The peso closed at a record low of 62.265 to the dollar on 28 August, breaching 62 for the first time, with MUFG describing it as Asia's worst-performing currency of the week. The central bank raised its policy rate to 5% the day before, a third consecutive increase. The balance of payments swung to a $1.47 billion deficit in July, reversing a $3.4 billion surplus in June, with the BSP citing the continued trade-in-goods deficit and net outflows from foreign portfolio investments among the causes.

Hot money is the most mobile component of that picture. It responds to interest rate differentials and risk appetite faster than trade or remittance flows, which makes it an early indicator rather than a lagging one.

The BSP projects foreign portfolio investments to post a net inflow of $1.8 billion for the full year, against an estimated $3.7 billion in 2025. Reaching that would require a substantial reversal in the remaining five months.

What to watch

Whether the run of net inflows extends into August is the first question, and it is the cleanest signal of whether sentiment has turned.

The second is the rate differential. The BSP has tightened 75 basis points since April, which should support inflows — and July's near-zero net figure suggests it has not yet.

The third is the full-year projection. A $1.8 billion net inflow from a $3.94 billion deficit implies close to $5.7 billion in net inflows across five months.