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Philippine Peso Halts Five-Day Advance on Intervention Concern

The Philippine peso snapped a five-day advance on speculation the central bank intervened, suggesting the monetary authority judged the currency’s gains to be excessive. Government bonds due 2031 declined.

The peso climbed 1.2 percent last week, the most in a year, as foreign funds turned net buyers of local shares for the first time in June, according to exchange data. Central bank Governor Amando Tetangco said on June 26 that the authorities will maintain a strategic presence in the market.

“There’s a sense there’s some intervention,” said Antonio Espedido, treasurer at China Banking Corp. in Manila. “That somehow capped the peso’s appreciation.”

The currency dropped 0.4 percent to 43.285 per dollar as of 11:04 a.m. in Manila. It fell to 44.20 per dollar on June 21, the lowest level since January 2012, and lost 5.5 percent in the quarter through June.

Australia & New Zealand Banking Group Ltd. raised its forecast for the Philippines’ gross domestic product growth for this year to 7.1 percent from 6.5 percent and to 6.5 percent from 6 percent for 2014.

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, increased 14 basis points, or 0.14 percentage point, to 7.80 percent.

The yield on the 8 percent sovereign bonds due July 2031 climbed 10 basis points to 5.05 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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