The Philippine peso advanced the most in four weeks after Fitch Ratings said the nation was expected to meet its 3 percent to 5 percent inflation target this year.
Consumer prices remain “well behaved,” Andrew Colquhoun, head of Fitch’s Asia-Pacific Sovereigns team, said in Manila today. Annual inflation was 4.6 percent in June, the fastest since April 2009, according to official data. The government completed a record peso bond exchange last week.
“The successful debt swap and positive comments from Fitch on inflation are supporting the currency,” said Prakriti Sofat, a regional economist at Barclays Capital in Singapore. “The fundamental story of the Philippines remains fairly strong.”
The peso strengthened 0.5 percent to 42.840 per dollar at the 4 p.m. close in Manila, according to Tullett Prebon Plc. The currency has gained 1.8 percent this year. The central bank may increase its benchmark rate by a quarter of a percentage point to 4.75 percent when it meets on July 28, Sofat predicted.
The Philippines must raise revenue, investments and economic growth to secure a credit-rating upgrade, Colquhoun said. The nation is rated BB+ by Fitch, one level below investment grade.
Philippine four-year peso bonds declined. The yield on the 8.375 percent securities due May 2015 increased two basis points, or 0.02 percentage point, to 4.98 percent, according to the Philippine Dealing & Exchange Corp.
The government sold 9 billion pesos ($210 million) of 4.875 percent bonds due July 2015 today, according to the Bureau of the Treasury. Bids totaled 22.68 billion pesos, allowing the Treasury to sell all the debt on offer.