The Federal Reserve cut is 2012 growth forecast to a range of 1.9 percent to 2.4 percent, from an April estimate of 2.4 percent to 2.9 percent, at the end of a two-day policy meeting yesterday. It expanded existing stimulus operations, while holding off from broader monetary easing that may have spurred demand for emerging-market assets. The U.S. is the Philippines’ biggest source of remittances and second-largest export market.
“The risk-off sentiment was triggered by concern on slower U.S. growth and disappointment that the Fed didn’t roll out further quantitative easing,” said Joric Nazario, treasurer at Philippine Veterans Bank in Manila.
The peso fell 0.7 percent, the most since May 18, to close at 42.423 per dollar in Manila, data from Tullett Prebon Plc showed. One-month implied volatility, which measures exchange- rate swings used to price options, declined 65 basis points to 5.95 percent.
The yield on the 7.375 percent notes due March 2021 rose seven basis points, or 0.07 percentage point, to 5.38 percent, according to Tradition Financial Services.
The central bank will remain watchful of global developments, particularly in Europe and the U.S., and “respond as appropriate to ensure there is no excessive volatility in domestic markets,” Governor Amando Tetangco wrote in an e-mail today. Authorities will ensure growth is sustained while inflation targets are met, he wrote.
Cash sent home by Filipinos living overseas increased 5.3 percent in April from a year earlier, compared with a 5 percent gain in March, the central bank reported on June 15. Exports rose 7.6 percent in April following a 1.2 percent drop, official data show. Overseas sales and remittances account for more than 30 percent of the $200 billion economy.
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