Philippine Peso Trades Near One-Week Low on Equity Outflows

The Philippine peso touched a one- week low after an outflow of funds from the local equities market. Bonds gained.

Foreign investors sold $263 million more local shares than they bought this week through yesterday, paring this year’s net purchases to $389 million, according to exchange data. The Philippine Stock Exchange Index has retreated 2 percent since reaching a record closing level of 5,145.89 points on March 16.

“There were noticeable equity outflows,” said Radhika Rao, an economist at Forecast Pte in Singapore. “Expectations are the stock index has reached the optimum level, adding to downward pressure on the peso.”

The peso was little changed at 43.045 per dollar at the close in Manila, according to Tullett Prebon Plc. The currency touched 43.125 earlier, the weakest level since March 15. The peso’s one-month implied volatility, which measures exchange- rate swings used to price options, rose to 6.3 percent from 6.1 percent yesterday.

The yield on the 6.375 percent bond due January 2022 declined three basis points, or 0.03 percentage point, to 5.43 percent, prices from Tradition Financial Services showed.

The government reported yesterday the budget deficit in January narrowed to 15.9 billion pesos ($369 million) from 101.5 billion pesos in December.

“The deficit data was positive because it shows the government has kept up with spending efforts to support growth,” Rao said. “But if we continue to see weak revenues in the first quarter, then there might be some concerns.”

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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