Philippine Peso Gains for 5th Week on Growth Outlook; Bonds Rise

The Philippine peso had a fifth weekly rally after policy makers said growth in the Southeast Asian economy will accelerate. Government bonds rose after inflation cooled.

The currency dropped by the most in two months today as data showed exports fell by more than economists forecast. An increase of between 5 percent and 7 percent in the nation’s gross domestic product is possible in the first quarter, Economic Planning Secretary Cayetano Paderanga said on Feb. 8. That compares with 4.6 percent growth in the year-earlier period. Ten-year bonds rallied for a third week after consumer prices rose the least in 13 months in January, climbing 3.9 percent.

“Prospects are that growth may be supported with lower inflation,” said Estelito Biacora, senior vice-president and head of private banking in Manila at Bank of the Philippine Islands. “That should translate to lower interest rates and provide room for investments for both portfolio and foreign direct investments.”

The peso appreciated 0.3 percent this week to 42.490 per dollar at the close in Manila, according to Tullett Prebon Plc. The currency fell 0.7 percent today, the most since Dec. 9.

Overseas sales slid 20.7 percent from a year earlier in December after falling 19.4 percent in November, the National Statistics Office said today. The median forecast of economists in a Bloomberg survey was for a contraction of 17.4 percent.

The yield on the 6.375 percent bonds due January 2022 declined 11 basis points, or 0.11 percentage point, to 5.10 percent this week, according to noon fixing prices from the Philippine Dealing & exchange Corp. The rate increased two basis points today.

Capital inflows are boosting the peso and the central bank has scope “for participation” in the foreign-currency market to curb volatility, Governor Amando Tetangco said yesterday.

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