The Philippine peso advanced to a four-year high as Deutsche Bank AG predicted the currency will strengthen 7.2 percent by the end of the year. Bonds advanced.
The peso rose 0.1 percent to 40.735 per dollar as of 2:18 p.m. in Manila, the strongest level since March 10, 2008, prices from Tullett Prebon Plc showed. It climbed 6.8 percent last year, second only to South Koreans’ won among Asia’s 11 most-traded currencies. One-month implied volatility, a measure of expected moves in exchange rates used to price options, was unchanged at 4.1 percent.
Dollar receipts will support the peso’s advance to 38 against the greenback, Michael Spencer, Deutsche Bank’s chief economist for Asia, said at a briefing in Manila today. Bangko Sentral ng Pilipinas may raise its benchmark rate three times this year as inflation pressures may build up should strong growth persist, he said. The peso will gain 3.2 percent to 39.5 by the end of 2013, according to the median estimate of 20 analysts surveyed by Bloomberg.
“To the extent there are underlying flows, the central bank will be willing to accommodate some appreciation,” of the peso, Sameer Goel, head of Asian rates and currency strategy at Deutsche Bank in Singapore, said at the same briefing.
The central bank cut its overnight borrowing rate four times last year to a record low 3.5 percent. The $225 billion economy is at risk of overheating and “it’s very healthy for the Philippines for interest rates to go up,” Spencer said.
Bonds advanced after the government reported today that exports rose 5.5 percent in November from a year earlier. That was the least since August and compares with the median estimate in a Bloomberg survey for a 20 percent increase.
The yield on the 3.875 percent notes due November 2019 fell seven basis points, or 0.07 percentage point, to 4.11 percent, halting four days of increases, according to midday fixing prices at Philippine Dealing & Exchange Corp.
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