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Foreign fund managers withdrew $807 million from the local financial market in September, the biggest net outflow in 32 months, on expected interest rate hike in the US.

Data from Bangko Sentral ng Pilipinas showed foreign portfolio investments or "hot money" posted a net outflow of $807 million in September, excluding the withdrawals in the first two weeks of October.

The September net outflow was also higher than the $323.98-million net outflow registered a year ago and a reversal of the $427-million net inflow in August this year. It was also the biggest net outflow since January 2014 when fund managers pulled out $1.8 billion.

Foreign withdrawals led to the decline of the Philippine Stock Exchange index to a four-month low of 7,312.18 Thursday. The peso also fell to a seven year low of 48.54 against the US dollar Wednesday, before rebounding to 48.34 Thursday.

Bangko Sentral Governor Amando Tetangco Jr. said Thursday a clearer guidance from the US Federal Reserve on the timing of its highly-anticipated interest rates hike was expected to calm rough trading in currency markets.

Tetangco issued the statement in reaction to the minutes of the Fed meeting held last month and was released Wednesday.

“The minutes as I understand it did not say anything new, i.e. , nothing unexpected or different from what market had “read” from the actual statement,” Tetangco said in a text message.

He said the division within the Fed was already spoken of even on statement date, adding the market would continue to closely monitor other Fed members who were speaking.

“We may see some clearer guidance from [Fed] chair [Janet] Yellen who is expected to speak on Friday. Hopefully, till then, regional currencies including the peso will trade within narrower bands,” Tetangco said.

Minutes of the meeting conducted Sept. 20 to 21 in Washington said that “several members judged that it would be appropriate to increase the target range for the federal funds rate relatively soon if economic developments unfolded about as the committee expected.”

The Federal Open Market Committee left the benchmark lending rate unchanged from 0.25 percent to 0.5 percent for the sixth straight meeting in September. But most of the 17 participants projected at least one hike before the year ends.

Data showed despite the outflow in September, hot money posted a net inflow of $1.27 billion in the first nine months, a reversal of the $413.93-billion net outflow in the same period last year.

Total inflows in September reached $1.27 billion, lower than $1.367 billion a year ago, while total outflows widened to $2.08 billion from $1.69 billion.

Bangko Sentral said among the reasons that caused the outflows in September were the bombing in Davao City early last month that prompted the government to declare a state of lawless violence in the country and the European Central Bank’s decision to discontinue its bond-buying program.

About 88.7 percent of investments in September were in securities listed in the Philippine Stock Exchange while the balance went to peso-denominated government securities.

All transactions resulted in net outflows, such as PSE-listed securities ($654 million); peso GS ($153 million); and other peso debt instruments (less than $1 million).

The United Kingdom, the United States, Singapore, Malaysia and Luxembourg were the top five investor countries in September, with combined share of 72.3 percent.

Foreign portfolio investments are overseas funds that are temporarily invested in local stocks, government securities and money market. They are also called “hot money” because of the ease they are invested in and taken out of the local markets.