Bloomberg News

Philippine Peso Weakens as Imports Drop, Trade Deficit Widens

May 25, 2012

The Philippine peso fell for a third week as official data showed imports dropped and the trade deficit widened.

Inbound shipments declined 3.3 percent in March from a year earlier after revised growth of 2.5 percent in February, while the trade gap almost doubled to $1.05 billion, the National Statistics Office reported today. The central bank will moderate “very sharp swings” in the exchange rate as these tend to disrupt planning, Assistant Governor Cyd Amador said yesterday.

“We can’t be too optimistic about the pace of recovery in the region, given the impact of slowing external demand,” said Radhika Rao, an economist in Singapore at Forecast Pte. “The peso is unlikely to buck the weakening trend in Asian currencies.”

The peso weakened 1.2 percent this week at 43.755 per dollar, data from Tullett Prebon Plc showed. It was little changed from 43.74 yesterday, after dropping to as low as 43.96, the weakest since Jan. 12. One-month implied volatility, which measures exchange-rate swings used to price options, climbed 25 basis points today to 7.5 percent.

The yield on the 8 percent notes due July 2031 was unchanged from yesterday at 6.04 percent, according to Tradition Financial Services. The rate climbed one basis point earlier.

Inflation this month may average from 2.5 percent to 3.4 percent, central bank Governor Amando Tetangco said yesterday. The annual pace of price increases increased to 3 percent in April from a 30-month low of 2.6 percent in March.

To contact the reporters on this story: Clarissa Batino in Manila at cbatino@bloomberg.net; 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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