Philippine Peso at 1-Year Low on Bernanke, Bonds Fall on Supply

The Philippine peso fell to its lowest level in more than a year on speculation U.S. policy makers will scale back stimulus measures. Government bonds dropped on concern the supply of local debt will increase.

The Southeast Asian nation’s financial markets slumped after Federal Reserve Chairman Ben S. Bernanke said yesterday the central bank may taper its bond purchases this year if the U.S. economy improves further, and a gauge of manufacturing in China fell more than analysts estimated. Philippine Treasurer Rosalia de Leon said this week she’s in talk with banks on a plan to sell local-currency bonds to individuals.

“The main concern is due to the Fed tapering,” said Ryanna Berza-Talan, who helps manage about $20 billion in assets at BDO Unibank Inc. (BDO) in Manila, the nation’s largest lender. “There’s also speculation about an upcoming retail-bond sale.”

The peso fell 1.1 percent to 43.67 per dollar as of 11:41 a.m. in Manila, according to data from Tullett Prebon Plc. The currency touched 43.675, its weakest level since June 1, 2012. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, fell two basis points, or 0.02 percentage point, to 8.30 percent.

The yield on the 8 percent bond due August 2018 rose 20 basis points to 3.15 percent, its highest level since March 4, according to Tradition Financial Services prices.

The Philippines sold a record 188 billion pesos ($4.3 billion) of 25-year retail bonds in October 2012. The Treasury will release its third-quarter auction plan before month-end.

To contact the reporter on this story: Clarissa Batino at cbatino@bloomberg.net

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

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