The Philippine peso had its biggest weekly loss in eight months and bonds declined as Europe’s debt crisis reignited concern that global economic growth will falter, damping demand for emerging-market assets.
Money sent home by Filipinos living overseas rose 5 percent in March, the least in a year, the central bank reported on May 15. Moody’s Investors Service lowered the debt ratings of 16 Spanish banks yesterday, while Greece’s credit status was reduced by one level by Fitch Ratings amid rising speculation the country will exit the euro.
“We don’t see any significant rebound in Asian currencies in the near term as long as the Greek problem is still in the picture,” said Gundy Cahyadi, a Singapore-based economist at Oversea-Chinese Banking Corp. “Growth is going to take a big hit if all these factors blow out of proportion.”
The peso dropped 1.6 percent this week to 43.247 per dollar at the close in Manila, the worst performance since the period ended Sept. 16, according to Tullett Prebon Plc. The currency fell 0.8 percent today. One-month implied volatility, a measure of exchange-rate swings used to price options, climbed 125 basis points, or 1.25 percentage points, to 6.75 percent during the five days.
The yield on the Philippines’ 5.75 percent bonds due November 2021 rose seven basis points from May 11 to 5.495 percent, according to prices from Tradition Financial Services. The yield added three basis points today.
The Philippine central bank is monitoring “possible effects of deleveraging” in Europe and other economies that may affect domestic funding, Governor Amando Tetangco said in an e- mail today. The foreign-exchange rate is “within a reasonable range” even as recent developments in Greece “have deepened the risk of contagion,” weakening risk appetite, he said.
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