The Philippine peso and government bonds slid on concern a Greek referendum on Europe’s aid plan could result in a default, prompting investors to sell emerging-market assets.
The MSCI Asia Pacific Index of regional stocks dropped for a third day after Greek Prime Minister George Papandreou announced his desire to put the rescue pact to a national vote. Higher capital charges on non-deliverable currency forwards may help curb gains in the peso, central bank Governor Amando Tetangco said yesterday.
“Europe’s debt crisis continues to influence currencies worldwide because people are worried about the success of the rescue plan,” said Rafael Algarra, executive vice president at Security Bank Corp. in Manila. “We will remain volatile as the news comes out from Europe.”
The peso dropped 0.4 percent to 42.78 per dollar as of the 4 p.m. close in Manila, according to Tullett Prebon Plc. It earlier fell as much as 0.8 percent. Financial markets were shut in the Philippines on Oct. 31 and Nov. 1 for holidays.
Bangko Sentral ng Pilipinas will increase the risk-weight charge on NDFs with a “net-open position” to the equivalent of a capital adequacy ratio of 15 percent from 10 percent, effective 2012, it said in a statement last week.
The yield on the government’s 5.875 percent bonds due January 2018 surged 16 basis points, or 0.16 percentage point, to 5.1 percent, according to Tradition Financial Services.
The government may cancel a plan to sell $500 million of overseas debt and is keeping its domestic borrowing plan for this year, Treasurer Roberto Tan told reporters in Manila today.
The Southeast Asian nation isn’t considering pre-funding next year’s requirement, Tan said after today’s Treasury bill auction. The government sold 9 billion pesos ($209 million) of bills today.