The Philippine peso touched its strongest level in almost five years as better-than-estimated U.S. manufacturing data spurred risk-taking, bolstering demand for emerging-market stocks. Government bonds due 2037 fell.
The Philippine Stock Exchange Composite Index (PCOMP) climbed 1.5 percent to a record high today after the Dow Jones Industrial Average rallied 2.4 percent yesterday. The Institute for Supply Management’s U.S. factory index rose to 50.7 in December, compared with 50.5 forecast in a Bloomberg survey, a report showed yesterday. Standard & Poor’s raised the Philippines’ credit-rating outlook from stable to positive on Dec. 20.
“The peso should be stronger given the Dow’s performance,” said Leong Sook Mei, the Singapore-based regional head of global currency research at Bank of Tokyo-Mitsubishi UFJ Ltd. “Among Asian currencies, we still like the peso. There’s the possibility of a credit upgrade either in late 2013 or 2014.”
The peso advanced 0.1 percent to 40.808 per dollar as of 10:56 a.m. in Manila, according to Tullett Prebon Plc. The currency reached 40.785 earlier, the strongest level since March 2008, and rallied 6.8 percent in 2012. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, was unchanged at 4.3 percent.
S&P cited improved governance and public finances when it boosted its outlook on the Southeast Asian nation. The company assigned the Philippines its top junk rating in July.
Inflation may have quickened to 3 percent in December, from 2.8 percent in November, according to the median estimate in a Bloomberg survey of economists before data due tomorrow.
The yield on the 6.125 percent government bonds due October 2037 increased one basis point, or 0.01 percentage point, to 5.58 percent, according to prices from Tradition Financial Services. The rate dropped three basis points yesterday.
To contact the reporter on this story: Lilian Karunungan in Singapore at firstname.lastname@example.org