The Philippine peso completed its biggest weekly gain since 2009 after progress on solving Europe’s debt crisis eased concern the global economy will go into recession, boosting the appeal of emerging-market assets.
The currency touched a seven-week high today after European leaders agreed yesterday to a 50 percent writedown of Greek debt and to expand their bailout fund to 1 trillion euros ($1.4 trillion). Bangko Sentral ng Pilipinas has intervened in the foreign-exchange market to ensure orderly trading and reduce volatility, Deputy Governor Diwa Guinigundo said yesterday.
“We are seeing a resumption of risk appetite in emerging markets across asset classes,” said Estelito Biacora, senior vice president for treasury at Bank of the Philippine Islands in Manila. “The positive developments in Europe are providing increased flows in equities and bonds, supporting the regional currencies.”
The peso climbed 1.9 percent to 42.620 per dollar this week, according to Tullett Prebon Plc. That was the biggest weekly gain since December 2009. The currency strengthened 0.6 percent today and touched 42.500, the strongest level since Sept. 9. Financial markets are shut in the Philippines on Oct. 31 and Nov. 1 for holidays.
The central bank increased the risk-weight charge on non- deliverable currency forwards described as having a “net-open position,” equivalent to a capital adequacy ratio of 15 percent from 10 percent, effective 2012, it said in a statement today.
The yield on the government’s 5.875 percent bonds due January 2018 fell 16 basis points, or 0.16 percentage point, to 4.94 percent this week, according to Tradition Financial Services. The rate dropped five basis points today.
The government had a budget deficit of 52.99 billion pesos ($1.2 billion) in the first nine months of the year against a targeted 234.35 billion pesos, a report showed this week. That compares with 259.79 billion pesos for the same period last year.
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