Bloomberg News

Philippine Peso Gains on $1.7 Billion Stimulus Plan; Bonds Drop

October 13, 2011

Oct. 13 (Bloomberg) -- The Philippine peso gained for a second day on optimism a government plan to boost spending will spur economic growth. Bonds dropped.

The currency traded near its strongest level in a month after President Benigno Aquino unveiled a $1.7-billion stimulus package yesterday after official data showed exports slumped in August by the most since September 2009. The MSCI Asia-Pacific Index of regional shares rose as Slovakia’s main political parties agreed to changes to the European Financial Stability Facility that will pave the way for an enhanced bailout fund.

“The stimulus package should be a good help to the economy,” said Ed Garcia, a currency trader at East West Banking Corp. in Manila. “The peso is benefiting mostly from improving news in Europe, even though we still expect to see volatility and uncertainty.”

The peso climbed 0.1 percent to 43.37 per dollar as of 4:15 p.m. in Manila, according to Tullett Prebon Plc. It reached 43.180 on Oct. 11, the strongest level since Sept. 14. The currency may trade between 43.15 and 43.65 over the next few weeks, Garcia said.

The currency pared gains after an official report showed China’s exports grew at the slowest pace in seven months. Overseas shipments rose 17.1 percent from a year earlier, compared with the median 20.5 percent median estimate of economists in a Bloomberg survey.

The Philippine government cut its 2011 growth forecast yesterday to a range of 4.5 percent to 5.5 percent, from 5 percent to 6 percent earlier. Exports declined 15.1 percent in August from a year earlier after shrinking 1.7 percent in July. China, including Hong Kong, was the nation’s largest overseas market last year.

The yield on the 8 percent government notes maturing in July 2031 rose six basis points, or 0.06 percentage point, to 6.975 percent, according to Tradition Financial Services.

The government is seeking to buy back about $1.5 billion of its existing dollar- and euro-denominated bonds to help cut its interest expenses. About $17.5 billion worth of those securities are eligible for tender, which closes in New York today.

--Editors: Ven Ram, Sandy Hendry

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To contact the reporter on this story: David Yong in Singapore at dyong@bloomberg.net

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


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