Bloomberg News

Philippine Peso Rises to Four-Year High as Remittances Quicken

October 16, 2012

The Philippine peso rose to a four- year high on speculation investors will buy the nation’s assets after money sent home by overseas workers increased at the fastest pace in nine months.

International funds bought $1.9 billion more local shares than they sold this year through yesterday, according to stock exchange data. Remittances, which account for about 10 percent of the country’s gross domestic product, climbed 7.6 percent in August, central bank data showed yesterday.

“We continue to see dollar inflows from remittances and growing interest from foreigners in equities and local money markets,” said Lito Mercado, head of trading at Rizal Commercial Banking Corp. (RCB) in Manila. “The market is still guarded on emerging-market prospects because of global growth concerns.”

The peso advanced 0.3 percent to 41.333 per dollar in Manila, the strongest level since April 1, 2008, according to Tullett Prebon Plc. It strengthened 6 percent this year, the second-best performance among Asia’s 10 most-active currencies excluding the yen.

One-month implied volatility for the peso, a measure of exchange-rate swings used to price options, was unchanged at 5.3 percent. The Philippine Stock Exchange Composite Index advanced 0.3 percent, a third day of gains.

The yield on the government’s 5.75 percent bonds due August 2037 slipped one basis point, or 0.01 percentage point, to 6.16 percent, according to noon fixing prices from Tradition Financial Services.

The government plans to issue new securities due in seven to 25 years in exchange for shorter-dated bonds after it completes an offering of notes targeted at individuals, Deputy Treasurer Eduardo Mendiola said on Oct. 9. It has so far received more than 500 billion pesos ($12 billion) in bids for the 25-year notes on sale until Oct. 22, Mendiola said yesterday.

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

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net


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