Philippine Peso Forwards Complete Weekly Gain on Growth Outlook

Philippine peso forwards completed a weekly gain as the Southeast Asian economy’s growth outlook improved and the Federal Reserve damped speculation a reduction in stimulus was imminent. Bonds advanced.

The International Monetary Fund raised its 2013 growth forecast for the Philippines to 7 percent from 6 percent on July 10. The lender’s resident representative Shanaka Jayanath Peiris said remittances from Filipinos working overseas and outsourcing revenues will keep the nation’s current account in surplus this year. Federal Reserve Chairman Ben S. Bernanke said this week the U.S. needs a “highly accommodative monetary policy” for the foreseeable future.

“The Philippines’ growth potential is positive and remittances are resilient,” said Jonathan Ravelas, chief market strategist at Manila-based BDO Unibank Inc. (BDO) Bernanke’s comments “caused some profit-taking on the long dollar trade,” he said. “Near term, it’s favorable for the peso.”

One-month non-deliverable forwards rose 0.7 percent this week to 43.39 per dollar as of 4:08 p.m. in Manila, data compiled by Bloomberg show. The contracts, which fell 0.3 percent today, are at a 0.05 percent discount to the spot rate.

The peso was little changed from last week and was 0.2 percent lower today at 43.412 per dollar, according to prices from Tullett Prebon Plc.

Citigroup Inc., the second-biggest currency trader and most-accurate forecaster for Asia over the last four quarters, rates the peso its best pick for the second half of 2013.

Current Account

The Philippines’ current-account surplus widened 56 percent to $3.4 billion in the first quarter of 2013 from the previous three months, official data show. The central bank forecast remittances by Filipinos living abroad will rise 5 percent this year to $22.5 billion.

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, fell 15 basis points, or 0.15 percentage point, this week to 7.39 percent. The gauge dropped one basis point today.

Government bonds gained this week. The yield on the 8 percent notes due July 2031 slid 35 basis points to 4.85 percent, according to prices from Tradition Financial Services. The rate dropped three basis points today.

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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