Bloomberg News

Philippine Peso Falls on U.S. Stimulus Delay Concern; Bonds Gain

June 08, 2012

The Philippine peso fell, snapping a three-day gain, as speculation cooled that U.S. policy makers will announce further stimulus measures to spur growth in the world’s largest economy.

The MSCI Asia-Pacific index of regional shares slid as much as 1.5 percent after Federal Reserve Chairman Ben S. Bernanke said the central bank will need to assess conditions before deciding if more measures are required to support the economy. Overseas investors cut holdings of Philippine shares by $19 million this month through yesterday, exchange data show.

“The market is disappointed with the Fed,” said Rafael Algarra, executive vice president of financial markets at Security Bank Corp. in Manila. “People were expecting more details on a possible quantitative easing.”

The peso fell 0.3 percent to close at 43.27 per dollar in Manila, paring its weekly advance to 0.3 percent, prices from Tullett Prebon Plc show. One-month implied volatility, a measure of exchange-rate swings used to price options, was unchanged at 6.75 percent today.

The yield on 6.375 percent government bonds due January 2022 fell three basis points to 5.43 percent, according to Tradition Financial Services. The rate dropped 18 basis points this week.

Philippine President Benigno Aquino said today he expects better growth in the coming quarters, after the economy expanded at the fastest pace since 2010 last quarter. China cut interest rates yesterday for the first time in more than three years to counter what Premier Wen Jiabao has called increasing downward economic pressure.

To contact the reporter on this story: Karl Lester M. Yap in Manila at kyap5@bloomberg.net

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net


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