Philippine Peso Falls as Spain Concern Mounts
The Philippine peso had its biggest weekly gain in more than three years on speculation improving economic fundamentals will win it a credit-rating upgrade.
The currency advanced for a fourth day after Standard Chartered Plc recommended yesterday that clients buy the peso via the non-deliverable forwards market, saying it expects the Philippines to achieve an investment-grade rating by 2014. The peso touched a six-week high today as the central bank reported funds sent home by overseas workers rose 5.4 percent in the first four months from a year earlier to $6.5 billion, making up 10 percent of the economy.
“There’s a lot of hope on the upgrade,” said Andy Ji, a Singapore-based foreign-exchange strategist at Commonwealth Bank of Australia. “The fiscal situation is good and the macro outlook is positive. Remittances have always been strong.”
The peso strengthened 2.4 percent this week to 42.255 per dollar in Manila, the most since the week ended Dec. 19, 2008, according to Tullett Prebon Plc. The currency rose 0.7 percent today and touched 42.255, the highest level since May 4. The peso has rallied 3.7 percent this year, the most among the 11 most-traded Asian currencies.
One-month implied volatility, a measure of exchange-rate swings used to price options, increased 25 basis points to 7 percent this week. It was unchanged today.
Borrowing Costs Held
Bangko Sentral ng Pilipinas kept its benchmark interest rate at a record-low 4 percent yesterday after the economy expanded 6.4 percent in the first quarter from a year earlier, the most in Southeast Asia. Exports increased 7.6 percent from a year earlier in April, a statistics office report showed yesterday, exceeding the median 0.5 percent gain forecast in a Bloomberg News survey.
Moody’s Investors Service raised the outlook on the nation’s Ba2 rating, the second-highest junk ranking, to positive last month, citing improving debt levels. That followed a similar move by Standard & Poor’s in December, which also rates the nation two levels below investment grade. Fitch Ratings raised its assessment to the top junk level last year.
The yield on the government’s 8 percent bonds due July 2031 climbed four basis points, or 0.04 percentage point, this week to 6 percent, according to prices from Tradition Financial Services. The rate was little changed today.
To contact the reporter on this story: Lilian Karunungan in Singapore at firstname.lastname@example.org