The Philippine peso climbed the most in a week on speculation funds sent home by citizens based abroad will rise to meet payments for school fees. Bonds rose.
The currency extended its 2.1 percent gain this quarter after Federal Reserve Chairman Ben S. Bernanke said yesterday U.S. monetary policy needs to focus on creating jobs, boosting investor appetite for emerging-market assets. Remittances, which make up about 10 percent of the Philippine economy, increased 5.4 percent in January from a year earlier to $1.6 billion, the central bank said on March 15.
“Everyone is expecting remittances to come in because of the school enrolment season,” said Lito Mercado, head of trading at Rizal Commercial Banking Corp. in Manila. “Bernanke’s statement signals that interest rates will stay low and that will help global growth.”
The peso closed 0.3 percent stronger at 42.92 per dollar, the biggest increase since March 19, according to Tullett Prebon Plc. It has advanced 2.2 percent this quarter. The currency’s one-month implied volatility, which measures exchange-rate swings used to price options, was unchanged at 5.75 percent.
The Bureau of the Treasury rejected all bids for seven-year bonds at an auction today to prevent borrowing costs from rising. The government has a “comfortable cash position” and the market was offering “unrealistic rates,” Treasurer Roberto Tan told reporters. The Treasury will release the second-quarter sale schedule by March 29 and it may not offer 20-year bonds in the coming quarter, Deputy Treasurer Eduardo Mendiola said today.
The yield on the 6.375 percent government bond due January 2022 declined five basis points, or 0.05 percentage point, to 5.40 percent, reversing a five-basis point increase earlier, prices from Tradition Financial Services showed.
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