Bloomberg News

Philippine Peso Advances as Imports Contract Most in 30 Months

June 26, 2012

The Philippine peso rose for the first time in four days as government data showed imports fell the most in 30 months amid a global slowdown, curbing demand for dollars.

Overseas purchases shrank 13.7 percent in April from a year earlier, the biggest drop since October 2009, and the trade deficit narrowed to $135 million from $1.05 billion, the National Statistics Office in Manila said today. Global trade has slumped amid Europe’s debt crisis, which will be discussed by the region’s leaders at a two-day summit this week.

“Manufacturers are still wary of stepping up purchases,” said Radhika Rao, an economist at Forecast Pte in Singapore. “Ahead of the European summit, gains in Asian currencies are going to be tentative.”

The peso rose 0.4 percent to 42.470 per dollar in Manila, according to Tullett Prebon Plc. The currency reached 42.675 yesterday, the weakest level since June 13. Its one-month implied volatility, a measure of exchange-rate swings used to price options, increased 35 basis points, or 0.35 percentage point, to 6.30 percent.

The peso has appreciated 0.9 percent this quarter, the best performance among Asia’s 10 most-used currencies excluding the yen. For the year, it’s strengthened 3.1 percent.

The yield on the government’s 5.875 percent bonds due March 2032 was unchanged at 5.94 percent, according to prices from Tradition Financial Services.

The government reported today that the budget balance swung to a deficit of 19.9 billion pesos ($468 million) in May from a surplus of 31 billion pesos in April as spending rose 16.7 percent.

To contact the reporter for this story: Lilian Karunungan in Singapore at at lkarunungan@bloomberg.net.

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


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