Philippine government bonds advanced as Greece’s largest pro-bailout parties gained ground in a weekend election, reducing the risk the country will leave the euro. The peso touched a 10-month high.
The Greek vote should ease some uncertainty in financial markets, Philippine central bank Governor Amando Tetangco said in an e-mail today. Bangko Sentral ng Pilipinas, which kept its overnight borrowing rate at 4 percent last week, has scope to maintain the benchmark at the current level and is ready to make adjustments as needed, Tetangco said.
“We’re seeing a relief rally after the Greece vote,” said Bunny Bernardo-Recto, vice president at Chinatrust Philippines Commercial Bank Corp. in Manila. “Given a scenario of cooling inflation, the central bank will probably keep rates on hold for a while.”
The yield on the 14.375 percent bonds due April 2017 fell six basis points, or 0.06 percentage point, to 5.1 percent, according to midday fixing prices at Philippine Dealing & Exchange Corp.
The peso closed little changed at 42.265 per dollar from 42.255 on June 15, after trading as high as 42.08, the strongest since Aug. 2, 2011, data from Tullett Prebon Plc showed. One-month implied volatility, which measures exchange-rate swings used to price options, was unchanged at 6.5 percent.
The currency pared gains after Tetangco lowered forecasts for the balance of payments surplus and international reserves this year. The surplus projection was cut to $2.6 billion from $2.8 billion and reserves were predicted at $77.5 billion to $78 billion from $79 billion.
The Bureau of the Treasury will auction 9 billion pesos ($213 million) of 20-year bonds tomorrow. The government may offer notes targeting individuals in the second half, First Metro Investment Corp. President Roberto Juanchito Dispo told reporters today. First Metro has helped sell the debt since 2001.
The peso will probably trade in a range of 42 to 44 per dollar for the rest of the year and the benchmark Philippine Stock Exchange Index may reach 5,500, First Metro said during a quarterly briefing. The stock index closed 2.4 percent higher at 5,050.41, its steepest advance in a month.
First Metro, the unit of Metropolitan Bank & Trust Co., the nation’s second-largest lender by assets, cut this year’s inflation forecast to a range of 3.2 percent to 3.4 percent, from 3.5 percent to 3.7 percent previously, it said today.
“At our last meeting, our assessment was that we could keep policy rates steady as the more upbeat domestic conditions are balanced by easier oil price volatilities,” Tetangco said today. “We continue to believe this, but we are ready to make adjustments as necessary based on how events unfold.”