Philippine Peso Gains on Speculation Drop Overdone; Bonds Fall
The Philippine peso rose for the first time in three days as some investors took advantage of declines triggered by unrest in the Middle East to buy the currency. Government bonds fell.
The peso has retreated 0.5 percent since Feb. 18 following a 1.1 percent weekly advance that marked it’s best performance in five months. Today’s rebound was modest because of concern instability in countries including Libya, Egypt and Bahrain will drive up the cost of crude oil imported by the Philippines and curb remittances from Filipinos living in the region, according to Marcelo Ayes, a Manila-based senior vice president at Rizal Commercial Banking Corp.
The dollar is having “a small pullback, a mini correction,” said Ayes. “The market is still wary. We are dependent on imported oil. There’s also the threat to remittances” as workers in the Middle East may have to be evacuated, he said.
The peso advanced 0.3 percent to close at 43.553 per dollar in Manila, according to prices from inter-dealer broker Tullett Prebon Plc. The currency may trade between 43.50 and 44 this week, Ayes said.
Filipinos working overseas sent home $1.69 billion in December, 8.1 percent more than a year earlier, according to official data this month. Remittances account for about a 10th of the economy.
The political turmoil in the Middle East is not expected to have “any serious impact on the peso and remittances at this point, but we’re monitoring the situation because the bulk of remittances” are from this region, central bank Deputy Governor Diwa Guinigundo told reporters in Manila today.
The yield on the 7 percent bond due January 2016 increased 2.5 basis points, or 0.025 percentage point, to 6.125 percent, according to Tradition Financial Services. A basis point is 0.01 percentage point.
To contact the reporter for this story: Lilian Karunungan in Singapore at at lkarunungan@bloomberg.net.
To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net.
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