Philippine Peso Little Changed as Europe Damps Investor Appetite

The Philippine peso was little changed, after gaining the most in more than two weeks yesterday, on concern a prolonged slowdown in Europe will damp demand for emerging-market assets. Government bonds fell.

Euro-area retail sales contracted for a 12th straight month in August from a year earlier, data showed today. The European Central Bank meets tomorrow, when officials are expected to leave borrowing costs unchanged at a record-low 0.75 percent, according to a Bloomberg survey. The peso climbed yesterday after a surprise jump in U.S. manufacturing boosted the Asian nation’s export outlook, while the Asian Development Bank upgraded the nation’s growth forecast today.

“The good U.S. data has been neutralized by concern over Europe,” said Jonathan Ravelas, chief market strategist in Manila at BDO Unibank Inc. “Investors still have this guarded optimism on the Philippines.”

The peso closed at 41.600 per dollar compared with 41.605 yesterday in Manila, according to Tullett Prebon Plc. It dropped as much as 0.2 percent earlier. The currency touched 41.590 on Oct. 2, the strongest level since Sept. 20. One-month implied volatility, a measure of exchange-rate swings used to price options, was unchanged at 5.3 percent.

The Asian Development Bank lifted its 2012 economic growth forecast for the Philippines to 5.5 percent from 4.8 percent. The peso has strengthened 5.4 percent this year, the best performance in Asia.

Consumer prices rose 3.8 percent in September from a year earlier, the same as in August that was the fastest since January, according to the median estimate of economists in a Bloomberg News survey before a report due Oct. 5.

The yield on the 4.75 percent notes due September 2022 increased three basis points to 4.75 percent, according to prices from Tradition Financial Services.

To contact the reporter on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net

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

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