Foreign investors continued their exodus from the Philippines in March, with government securities bearing the brunt of outflows as the prolonged Middle East conflict deepened risk aversion, data from the Bangko Sentral ng Pilipinas (BSP) showed.
Net foreign portfolio investments (FPI) registered with the central bank hit a net outflow of $1.96 billion, the largest in three months, reversing February's net inflow of $284 million. For the first quarter, total net outflows reached $2.81 billion.
"Hot money," as these short-term investments are known, is highly sensitive to shifts in global sentiment and can quickly exit at the first sign of trouble, unlike foreign direct investments that are tied to long-term projects and job creation.
By instrument, government securities—including Treasury bonds and bills—saw a net outflow of $1.3 billion, compared with a $254 million net gain in February. Yields on 10-year government bonds climbed above 6% for most of March and briefly breached 7%, reflecting investor wariness.
Meanwhile, local equities registered a net hot money outflow of $653 million, reversing February's net inflow of $27 million. The Philippine Stock Exchange index slipped below 5,000 in March.
Peso under pressure
The capital flight weighed on the Philippine peso, which weakened past the 61-per-dollar level as investors sought safe-haven assets. To counter inflation and support the currency, the central bank raised its key policy rate by 25 basis points to 4.5% on April 23.
Looking ahead, the BSP now expects total FPI—including unregistered transactions—to post a net inflow of $3.7 billion in 2026, down from a previous estimate of $5.6 billion.