Bloomberg News

Philippine Peso Touches 7-Week Low as Remittance Growth Slows

August 16, 2012

The Philippine peso fell to a seven- week low on signs the government favors a weaker currency and after growth in remittances slowed. Government bonds advanced.

Funds sent home by Filipinos living abroad rose 4.2 percent in June from a year earlier, the least in 15 months, the central bank reported yesterday. The government said this week it’s looking at raising money in a way that won’t fuel gains in the currency that would hurt exporters. Overseas sales and remittances account for about 30 percent of the $225 billion economy.

“The market is cognizant that the bias of the monetary authority is for the peso to move in line with regional currencies,” said Roland Avante, president of Philippine Business Bank in Manila.

The peso closed at 42.285 per dollar from 42.27 yesterday, Tullett Prebon Plc prices showed. It fell as much as 0.3 percent earlier to 42.43, the weakest level since June 29. The currency has gained 3.7 percent this year, the best performance among Asia’s 11 most-traded currencies. One-month implied volatility, a measure of exchange-rate swings used to price options, fell six basis points to 6.50 percent.

The government is coordinating with the central bank on how it can use the nation’s foreign-exchange reserves to pay some overseas debt ahead of schedule, Finance Undersecretary Rosalia de Leon said yesterday. It is also considering selling bonds targeting foreign-currency deposits onshore so as not to bring in “additional dollars on a net basis,” she said.

Export growth slowed to 4.2 percent in June from a year earlier, compared with 19.7 percent the previous month, official data show. Foreign reserves climbed to a record $79.3 billion in July, according to the central bank.

The yield on the 4.875 percent bonds due August 2022 fell three basis points, or 0.03 percentage point, to 5 percent, according to midday fixing prices at Philippine Dealing & Exchange Corp.

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

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


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