The Philippine peso fell, halting a seven-day advance, on concerns gains in the currency were excessive after the longest winning streak in 16 months.
The peso reached 40.853 yesterday, the strongest level since March 2008, as the benchmark stock index rose to a record and on speculation overseas Filipino workers are sending more money home for Christmas. A technical indicator for the currency, Asia’s best-performer this year, signaled the dollar was about to rebound. The central bank remains watchful of the market as the peso has appreciated faster than its peers, Governor Amando Tetangco said yesterday.
“Despite the major drivers such as remittances and the portfolio flows, I think the peso strength was overdone,” said Jonathan Ravelas, chief market strategist at Manila-based BDO Unibank Inc. (BDO) “We should probably correct toward 41.20 to 41.70 before the end of the year.”
The peso dropped 0.1 percent to 40.880 per dollar as of 10 a.m. local time, according to Tullett Prebon Plc. The currency’s 14-day relative-strength index was just shy of the 30 level yesterday that indicated the dollar may gain. The Philippine currency has climbed 7.1 percent this year.
One-month implied volatility, a measure of expected moves in the exchange rate used to price options, was unchanged at 4.5 percent.
A government report today showed gross domestic product increased 7.1 percent in the third quarter from a year earlier, beating the 5.4 percent median estimate of economists in a Bloomberg News survey and accelerating from 6 percent in the previous three-month period.
The yield on the 6.125 percent government bonds due October 2037 fell one basis point, or 0.01 percentage point, to 5.75 percent, according to prices from Tradition Financial Services.
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