Bloomberg News

Philippine Peso Drops to 8-Month Low on Plan to Ease Outflows

October 03, 2011

Oct. 3 (Bloomberg) -- The Philippine peso dropped to its weakest level in eight months following a report that the central bank will ease restrictions on capital outflows.

The Philippine Star reported today, citing Governor Amando Tetangco, one of the measures being considered is allowing institutions to buy dollars from banks to pay foreign obligations without the need to register with Bangko Sentral ng Pilipinas. The peso weakened for a third day on speculation imports will increase after two typhoons ravaged the country in the past week.

“The measures the BSP is considering are likely to provide some support for the U.S. dollar,” said Joey Cuyegkeng, an economist in Manila at ING Groep NV. “The economic losses due to the recent typhoons are other reasons.”

The peso fell 0.6 percent to close at 43.975 per dollar in Manila, according to Tullett Prebon Plc. The currency earlier reached 44.03, its weakest level since Feb. 2.

Tetangco said last month the monetary authority may ask banks to set aside more capital when trading non-deliverable forwards in the peso to ensure they are used only for hedging.

Typhoon Nalgae, the second storm to strike the Philippines in a week, killed at least one person and flooded nine towns and cities in Luzon, the nation’s main island. At least 55 people were killed in the same area as Typhoon Nesat caused 8.8 billion pesos ($200 million) of damage.

The Philippine central bank will consider the impact of recent and expected tropical storms to farm output, domestic supply and inflation at the next monetary policy meeting on Oct. 20, Tetangco said in a media briefing in Manila.

The Philippines rejected all bids for debt due in three months to a year at today’s auction as investors sought higher yields. Bids totaled 7.582 billion pesos.

Ten-year government bonds rose, with the yield on the 6.5 percent notes due April 2021 falling one basis point, or 0.01 percentage point, to 6.2 percent, according to noon fixing prices from the Philippine Dealing & Exchange Corp.

--Editors: Simon Harvey, James Regan

To contact the reporter on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net.

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net.


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