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Philippine Peso Has Weekly Decline on Capital Curbs Speculation

The Philippine peso headed for its biggest weekly drop since August on speculation policy makers will tighten measures to curb capital inflows. Government bonds rose after inflation unexpectedly slowed last month.

Bangko Sentral ng Pilipinas Governor Amando Tetangco said today the central bank will monitor fund flows, especially after the nation was raised to investment grade by Fitch Ratings last week. The monetary authority will probably relax rules on foreign-currency transactions this month to encourage outflows, he said on April 2. Global investors bought $1 billion more local stocks than they sold this year, compared with $430 million in the same period of 2012, and the currency is 4 percent stronger than it was 12 months ago.

“Worries about further capital-inflow measures is one of the factors dragging the peso lower,” said Wee-Khoon Chong, a strategist at Societe Generale SA in Hong Kong. “In the short term, the peso should hover around current levels.”

The peso fell 0.8 percent this week to 41.162 per dollar as of 4:10 p.m. in Manila, the biggest loss since the five days ended Aug. 17, Tullett Prebon Plc prices showed. It was little changed today and touched 41.235 earlier, the weakest level since Dec. 27.

One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, surged 77 basis points, or 0.77 percentage point, this week to 4.55 percent.

Consumer prices gained 3.2 percent from a year earlier, official data showed today, while the median forecast of economists surveyed by Bloomberg News was for a repeat of February’s 3.4 percent increase.

The yield on the 9.125 percent notes due September 2016 decreased eight basis points to 2.53 percent today, according to Tradition Financial Services.

To contact the reporter on this story: Elffie Chew in Kuala Lumpur at echew16@bloomberg.net

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

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