The Philippine peso completed its biggest weekly gain in a month as better-than-estimated U.S. data and pledges by global central banks to bolster growth spurred demand for emerging-market assets.
European Central Bank President Mario Draghi said yesterday the bank stands ready to buy bonds to ease the region’s debt crisis. Federal Reserve Chairman Ben S. Bernanke renewed his pledge to sustain record stimulus to support the labor market even if the U.S. expansion gains strength. The peso has appreciated 5.7 percent this year, Asia’s best-performing currency. Government bonds fell this week.
“U.S. data and signs global central banks are ready to do what it takes to limit any downside risks to growth have been positive for risk,” said Radhika Rao, an economist at Forecast Pte in Singapore. “Emerging central banks have to be on the defensive, looking to limit their currency appreciation.”
The peso climbed 0.7 percent this week to 41.427 per dollar in Manila, prices from Tullett Prebon Plc show. The currency rose 0.1 percent today. One-month implied volatility, a measure of exchange-rate swings used to price options, fell 20 basis points, or 0.20 percentage point, to 5.3 percent this week.
The U.S. Labor Department is due to publish jobs numbers for September later today. Around 162,000 positions were added by companies last month, figures from ADP Employer Services showed on Oct. 3, topping the median forecast of 140,000 by economists surveyed by Bloomberg.
The U.S. Institute for Supply Management’s factory index climbed to 51.5 last month from 49.6 in August, breaching the dividing line of 50 that signals expansion and beating the 49.7 predicted in a separate survey, official data showed on Oct. 1.
Philippine inflation unexpectedly slowed in September to 3.6 percent from a year earlier, from a 3.8 percent pace in August, the National Statistics Office said in Manila today. The median estimate was for a 3.8 percent rate.
Central bank Governor Amando Tetangco said in a speech in Manila today that monetary policy is appropriate and any easing may fan inflation as global developments encourage inflows to emerging markets like the Philippines.
“There’s room for the central bank to ease if necessary,” said Rao. Capital inflows and gains in the peso increase the odds for a rate cut later this month, she said.
Policy makers will meet on Oct. 25. They have left the overnight borrowing rate at 3.75 percent since cutting it by 25 basis points in July.
The Asian Development Bank raised its 2012 economic growth forecast for the Philippines this week to 5.5 percent from 4.8 percent. It estimates inflation at 3.5 percent.
The yield on the government’s 5.875 percent bonds due March 2032 increased 12 basis points, or 0.12 percentage point, in the past five days to 5.84 percent, according to prices from Tradition Financial Services. The rate rose two basis points today.
To contact the reporter on this story: Lilian Karunungan in Singapore at firstname.lastname@example.org