Peso Rises to Five-Month High, Bonds Gain as Inflation Slows: Manila Mover
The Philippine peso rose to a five- month high and bonds rallied on optimism cooling inflation gives the central bank flexibility to cut interest rates to boost economic growth.
The currency advanced for a fifth day after Greek leaders made progress on a rescue plan with the nation’s creditors, reducing concern Europe’s debt crisis will slow global growth. Philippine consumer prices rose 3.9 percent in January from a year earlier, the least in 13 months, official data showed yesterday.
“Easing inflation gives the central bank room to cut interest rates and that would be supportive of economic growth,” said Enrico Tanuwidjaja, a senior currency analyst at Malayan Banking Bhd. in Singapore. “The peso’s movements are also due to global risk appetite.”
The yield on the 6.375 percent debt due January 2022 dropped six basis points, or 0.06 percentage point, to 5.14 percent, according to noon fixing prices from the Philippine Dealing & Exchange Corp.
The peso gained 0.4 percent to 42.220 per dollar in Manila, according to Tullett Prebon Plc. The currency touched 42.185, the strongest level since Sept. 5. The peso has appreciated 3.9 percent this year. The Philippine Stock Exchange Index (PCOMP) rose 1.1 percent today to 4,805.80.
Economic Outlook
Growth may quicken this quarter from 4.6 percent a year earlier and an expansion of between 5 percent and 7 percent in the three months ending March is possible, Economic Planning Secretary Cayetano Paderanga said today. The economy will “feel the effects” of faster government spending that started in the fourth quarter of 2011, he said.
Gross domestic product grew 3.7 percent in 2011, compared with a revised 7.6 percent expansion a year earlier, official data showed Jan. 30.
Central Bank Governor Amando Tetangco said yesterday slowing inflation means authorities have “policy space should the need to support growth persist.” Bangko Sentral ng Pilipinas lowered its overnight borrowing rate by 25 basis points to 4.25 percent on Jan. 19. It next meets on March 1.
To contact the reporter on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net
To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net
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