Oct. 21 (Bloomberg) -- The Philippine peso dropped for a second day, completing a weekly loss, as a protracted debt crisis in Europe bolstered demand for dollars.
The nation’s central bank refrained from raising its benchmark interest rate yesterday, citing a “significantly more uncertain” outlook for the global economy owing to Europe’s debt woes. Exports slid the most since 2009 in August and the government cut its economic growth forecasts for this year and next on Oct. 12.
“With the Europe issues around, the peso probably won’t be much stronger than current levels,” said Catherine Bautista, a senior trader of sovereign bonds at Union Bank of the Philippines. “There’s definitely going to be a slowdown in the local economy before we see some pickup by the first quarter next year.”
The peso fell 0.3 percent to 43.443 per dollar in Manila, after declining 0.4 percent yesterday, according to Tullett Prebon Plc. It lost 0.2 percent this week. The currency reached a one-month high of 43.115 on Oct. 17 and Bautista said it may reach 43 by year-end.
France and Germany’s finance ministers meet in Brussels today to lay the groundwork for an Oct. 23 summit, a deadline for a solution to the debt crisis. Another summit for Oct. 26 was set yesterday after Germany and France said the EU needs more time to seal a “global and ambitious” accord.
Bangko Sentral ng Pilipinas will likely keep its current policy on hold through 2012 as economic growth eases to 4.4 percent this year and 4 percent in 2012, Goldman Sachs Group Inc. said in a research note. “Well-anchored” inflation provides room for an accommodative policy setting, it said.
President Benigno Aquino announced on Oct. 12 a $1.7 billion stimulus program to spur growth, a day after an official report showed overseas sales contracted at an annual rate of 15.1 percent in August, the most since September 2009.
Government bonds declined. The yield on the 6.125 percent security maturing in September 2020 rose five basis points, or 0.05 percentage point, to 5.90 percent, according to Tradition Financial Services.
--With assistance from Clarissa Batino in Manila. Editors: James Regan, Anil Varma
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