Philippine Peso Rises to Two-Year High as Exports Pick Up; Bonds Decline

The Philippine peso rose to a two- year high after the government reported an unexpected pickup in exports, brightening the outlook for the economy and helping spur inflows.

Overseas sales increased 35.9 percent from a year earlier in July, beating the previous month’s 33.7 percent growth and the median 29.3 percent gain forecast in a Bloomberg survey of economists. Shipments totaled $49 billion last year and are the nation’s largest source of foreign exchange.

“There’s a bullish run for Asian assets on the view Asia will be performing better than Europe and America,” said Rafael Algarra, treasurer at Security Banking Corp. in Manila. “Funds are flowing into the region.”

The peso rose 0.3 percent to 44.112 per dollar as of the 4 p.m. close in Manila, the strongest level since August 2008, according to prices from inter-dealer broker Tullett Prebon Plc. It has appreciated 4.9 percent this quarter, leading gains among Asia’s emerging-market currencies.

Rising exports helped drive economic growth of 7.9 percent in the last quarter, the fastest pace in three years. Asia’s developing economies will expand 9.2 percent this year, outpacing growth of 1 percent in the 16-nation euro region and 3.3 percent in the U.S., according to International Monetary Fund estimates published July 8.

Philippine benchmark four-year bonds fell, lifting the yield from a record-low.

The yield on the 6.25 percent note due in January 2014 jumped 12 basis points to 5.015 percent, according to ICAP Plc. The yield this week dropped to the lowest level since the debt started trading in January 2009.

The Philippine government today started a global sale of at least $500 million of peso bonds due January 2021, according to investors offered the securities.

The arrangers of the sale indicated that the bonds will have a coupon of about 5.25 percent, according to four asset managers, who asked not to be identified because the details aren’t yet public.

To contact the reporter for this story: Karl Lester M. Yap in Manila at kyap5@bloomberg.net.

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