Bloomberg News

Philippine Peso Falls as Spain Concern Mounts

May 28, 2012

The Philippine peso fell toward a four-month low as concern the Spanish economy is looking increasingly fragile deterred risk-taking. Bonds were steady.

The currency was poised for a second monthly loss after Spanish Prime Minister Mariano Rajoy called for a show of force from European authorities as his government sought ways to avoid tapping markets to fund the bailout of the nation’s third- biggest lender. Philippine gross domestic product increased by the most in a year in the first quarter, according to the median estimate of economists surveyed by Bloomberg before official data due this week.

“The peso is mostly being driven by global sentiment,” said Goh Puay Yeong, a Singapore-based foreign-exchange strategist at Credit Suisse Group AG. “Growth is still pretty decent there. The macroeconomic outlook is still stable.”

The peso weakened 0.2 percent to 43.627 per dollar as of 9:59 a.m. in Manila, according to Tullett Prebon Plc. The currency reached 43.960 on May 25, the weakest level since Jan. 16, and has lost 3.2 percent in May, following a 1.7 percent decline in April. One-month implied volatility, a measure of exchange-rate swings used to price options, was unchanged at 7.25 percent.

The Southeast Asian economy expanded 4.4 percent in the first quarter from a year earlier, following 3.7 percent growth in the preceding three months, according to the Bloomberg survey before a government report on May 31.

The yield on the Philippines’ 5.75 percent bonds due November 2021 was steady at 5.55 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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