Bloomberg News

Philippine Peso Snaps Three-Day Drop on U.S. Data; Bonds Decline

August 06, 2012

The Philippine peso rose, snapping a three-day slide after U.S. payrolls climbed more than forecast and the local central bank signaled it’s prepared to do more to support growth.

The currency reached the highest level since July 19 as regional stocks rallied after a Labor Department report on Aug. 3 showed American employers added 163,000 jobs last month, compared with 64,000 in June. Bangko Sentral ng Pilipinas has room for policy action as needed to spur growth, Governor Amando Tetangco told senators in Manila today. Government bonds dropped before an inflation report tomorrow.

The peso gained as much as 0.4 percent to 41.68 per dollar before closing at 41.84 in Manila, according to Tullett Prebon Plc. One-month implied volatility, a measure of exchange-rate swings used to price options, was little changed at 6 percent.

“The peso benefited from the global positive sentiment,” said Fernando Mangalindan, a bond trader at Philippine Savings Bank (PSB) in Manila. “There is very strong support near 41.75.” Support refers to a level on a price graph where technical analysts anticipate orders to buy an asset.

Overseas funds were net buyers of $59 million of local stocks last week, exchange data showed. Policy actions have helped the economy grow and remittances and fund inflows will sustain the peso’s gains, Tetangco said today. The central bank cut its overnight rate to a record low 3.75 percent on July 26. The $225 billion economy expanded 6.4 percent in the first three months of 2012, the most in six quarters.

The yield on the Philippine government’s 6.375 percent bonds due January 2022 rose two basis points, or 0.02 percentage point, to 4.85 percent, according to Tradition Financial Services.

A government report tomorrow may show annual inflation quickened to 3.1 percent in July from 2.8 percent in June, according to the median forecast in a Bloomberg News survey.

To contact the reporter on this story: David Yong in Singapore at dyong@bloomberg.net.

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net


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