Bloomberg News

Philippine Peso Weakens, Bonds Rise as Global Recovery Slows

May 02, 2012

The Philippine peso retreated from its strongest level since February and government bonds rose on concern the global economic recovery is stalling.

The currency snapped a five-day advance after data showed yesterday companies in the U.S. added the fewest workers in seven months in April and the jobless rate in the euro area rose to a 15-year high. The Bloomberg-JPMorgan Asia Dollar Index fell for a third successive day as a survey showed China’s non- manufacturing industries grew at a slower pace in April.

Yesterday’s data played “a big part in creating concerns globally,” said Saktiandi Supaat, head of foreign-exchange research at Malayan Banking Bhd. in Singapore. “The peso is in a tight range. The general trend is that the peso will be supported in terms of economic fundamentals.”

The currency declined 0.1 percent to 42.240 per dollar as of 9:41 a.m. in Manila, according to Tullett Prebon Plc. The currency touched 42.110 yesterday, the strongest level since Feb. 9. One-month implied volatility, which measures exchange- rate swings used to price options, was little changed at 4.50 percent.

Losses in the peso may be limited at 42.50, Supaat predicted. The World Bank and the International Monetary Fund have forecast that growth in the Philippine economy will accelerate to 4.2 percent in 2012 from 3.7 percent last year.

The yield on the Philippines’ 7 percent bonds due March 2017 fell three basis points, or 0.03 percentage point, to 4.725 percent, according to prices from Tradition Financial Services.

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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