Bloomberg News

Philippine Peso Hits Six-Week Low on Stock Losses: Bonds Climb

November 24, 2011

Nov. 24 (Bloomberg) -- The Philippine peso fell to the lowest level in six weeks on concern contagion from the European debt crisis will undermine global growth and export demand. Government bonds advanced.

The currency dropped for a second day as the MSCI Asia- Pacific Index of stocks headed for a fourth week of losses. Central bank Governor Amando Tetangco said some funds are exiting emerging markets including the Philippines as the benchmark Composite Index fell 3 percent this month. Yields on German bonds jumped yesterday after the government failed to sell 35 percent of 10-year notes on offer at an auction.

“The peso is following the weak trend in the euro,” said Fernando Mangalindan, who trades dollar-denominated bonds at Philippine Savings Bank in Manila. “We could expect continued outflows with the negative news and losses in equity markets.”

The peso fell 0.4 percent to 43.655 per dollar as of 4 p.m. in Manila, adding to yesterday’s 0.5 percent decline, according to Tullett Prebon Plc. The currency has lost 2.4 percent this month and earlier reached 43.675, the weakest level since Oct. 6.

China’s Purchasing Managers’ Index of manufacturing fell to 48 in November from 51 in October, contracting by the most since March 2009, preliminary data from HSBC Holdings Plc and Markit Economics showed yesterday. European factory output and services also shrank, separate Markit reports showed.

The Philippine central bank is monitoring economic and monetary policies in the U.S. and Europe, Tetangco told reporters in Manila yesterday. Risk aversion has led to capital outflow from the Philippines, he said.

The yield on the government’s 8 percent bonds due July 2031 dropped for a third day, losing two basis points, or 0.02 percentage point, to 6.835 percent, according to Tradition Financial Services.

--Editors: Simon Harvey, 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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