Philippine Peso Posts Weekly Decline on China, Europe Slowdowns

The Philippine peso had its biggest weekly loss in a month as signs of deepening slowdowns in China, Japan and Europe worsened the outlook for the nation’s exports.

Reports yesterday indicated factory production in China contracted for an 11th month in September, while manufacturing and services output in the euro area fell to a 39-month low. Japanese exports declined for a third month in August while the surplus on the Philippines’ balance of payments narrowed, official data showed this week.

“The slowing growth on the global economic front is causing a sense of uncertainty,” said Jonathan Ravelas, chief market strategist in Manila at BDO Unibank Inc. (BDO), the nation’s largest lender. “That creates short-term demand for dollars.”

The peso fell 0.6 percent this week to 41.665 per dollar in Manila, according to data from Tullett Prebon Plc. It gained 0.2 percent today. The currency reached 41.358 on Sept. 17, the highest since April 2008. One-month implied volatility, which measures exchange-rate swings used to price options, was unchanged at 5.25 percent.

Philippine exports to China fell 14 percent from a year earlier in July, compared with a 39 percent gain in the same month of 2011, official data show. Shipments to Japan shrank 28 percent versus growth of 85 percent a year earlier.

Shrinking Surplus

The country had a $582 million surplus on its balance of payments in August, the central bank said Sept. 19, compared with $3.2 billion in July. Unemployment rose to 7 percent in July from 6.9 percent in April, the statistics office said on Sept. 18.

The yield on the government’s 8 percent bonds due July 2031 climbed 14 basis points, or 0.14 percentage point, this week to 5.75 percent, according to Tradition Financial Services. The notes fell the most in four months before the treasury auctions 9 billion pesos ($216 million) of 2032 debt on Sept. 25.

Bangko Sentral ng Pilipinas kept its benchmark overnight rate at a record-low 3.75 percent on Sept. 13, and raised its inflation forecasts for 2012 and 2013. Consumer prices rose 3.8 percent in August from a year earlier, after a 3.2 percent gain in July.

To contact the reporter on this story: David Yong in Singapore at dyong@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net

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