Bloomberg News

Philippine Peso Weakens as Central Bank Seen Curbing Inflows

April 03, 2013

The Philippine peso fell the most in a week on speculation the central bank will take more steps to curb inflows. Government bonds were little changed.

The currency dropped for a fourth day after Governor Amando Tetangco reiterated yesterday the monetary authority could introduce more measures aimed at slowing the peso’s 4.3 percent advance against the dollar in the past year, the second-best performance in Asia after Thailand’s baht. The Philippines won its first investment-grade rating from Fitch Ratings on March 27.

“The peso is fundamentally sound and supported by the latest rating upgrade,” said Reuben Mark Angeles, head of research at First Metro Securities Brokerage Corp. in Manila. “They don’t want it to be too strong relative to other regional currencies.”

The peso weakened 0.3 percent to 41.045 per dollar as of 10:43 a.m. Manila, according to data from Tullett Prebon Plc. The currency may trade between 40.80 and 41 through the end of June, Angeles said. One-month implied volatility, a measure of expected exchange-rate moves used to price options, fell three basis points or 0.03 percentage point, to 3.81 percent, data compiled by Bloomberg show.

Overseas investors bought $1 billion more local stocks than they sold this year, compared with $430 million in the same period in 2012, exchange data show. The benchmark share index has rallied every month since August and reached an all-time high on April 1.

The yield on the 6.125 percent bonds due October 2037 was steady at 3.79 percent, according to Tradition Financial Services. It reached 3.71 percent on April 2, the lowest level since it was sold in October.

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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