Philippine Peso Posts Best Month Since September 2010 on Growth

The Philippine peso rose to complete its best month since September 2010 as the fastest pace of economic expansion in Southeast Asia draws overseas investors.

The peso is the best performer this quarter among the region’s 10 most-active currencies as funds based abroad bought $568 million more Philippine shares than they sold. Ruperto Majuca, assistant director general of the National Economic Development Authority, predicts second-quarter growth will be close to the 6.4 percent in the first three months of the year, the most since the period ended September 2010. Markets across Asia rallied as European officials pledged support for Spain.

“It’s mostly a reflection of the good economic data about the Philippines that’s tempering risk aversion caused by worries in Europe,” said Rafael Algarra, executive vice president of financial markets at Security Bank Corp. in Manila. “Most of the data, from fiscal to growth to inflation, is supportive for the economy.”

The peso appreciated 0.4 percent to 42.160 per dollar at the close in Manila, taking gains this month to 3.2 percent and 1.8 percent for the quarter, prices from Tullett Prebon Plc show. One-month implied volatility, a measure of exchange-rate swings used to price options, fell 145 basis points, or 1.45 percentage points, to 6.3 percent this month. It was unchanged today.

Debt Sale Target

European leaders agreed to drop a condition that emergency loans to Spanish banks would give their governments preferred creditor status. Luxembourg Prime Minister Jean-Claude Juncker, who heads the group of euro-area finance ministers, said officials agreed on “short-term measures” to aid Spain and Italy after a meeting in Brussels.

“We will keep all options open to make the interventions that need to be done to calm the situation,” Juncker told reporters.

The Philippines’ budget deficit in 2013 will probably amount to 241 billion pesos ($5.7 billion), or 2 percent of gross domestic product, compared with a target of 279.1 billion pesos, or 2.6 percent of GDP this year, Budget Secretary Butch Abad said on June 16.

The Philippines plans to sell 108 billion pesos of bills and bonds in the third quarter, the Bureau of the Treasury said yesterday. That compares with 106.5 billion pesos of the securities it planned to sell this quarter.

The yield on 6.375 percent government bonds due January 2022 fell 15 basis points today and 27 basis points this month to 5.28 percent, the lowest level since May 3, according to Tradition Financial Services.

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