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Philippine Peso Rises Toward Four-Year High on Fed Easing Bets

Jan. 15 (Bloomberg) -- The Philippine peso climbed toward a four-year high as speculation the U.S. Federal Reserve will maintain an easy monetary policy bolstered demand for riskier assets. Government bonds gained.

The Fed’s asset purchases aimed at spurring economic growth are having “some effect” and the authorities will continue to assess the effectiveness, Chairman Ben S. Bernanke said at the University of Michigan yesterday. Foreign investors bought $430 million more Philippine stocks than they sold this month through yesterday, according to stock exchange data.

“Bernanke’s speech yesterday supported the need for U.S. easing,” said Saktiandi Supaat, head of foreign-exchange research at Malayan Banking Bhd. in Singapore. “There’s a shift out of safe-haven assets.”

The peso advanced 0.3 percent to 40.563 per dollar as of 5:14 p.m. in Manila, the biggest gain since Jan. 2, according to Tullett Prebon Plc. It touched 40.550 yesterday, the strongest level since March 2008.

Speculative flows can create an asset-price bubble and the authorities have participated in the foreign-exchange market to manage the peso, central bank Governor Amando Tetangco said in a speech in Manila today.

Overseas workers’ remittances rose 7.6 percent to $1.92 billion in November, according to a central bank statement released today, beating the 5 percent increase forecast by economists in a Bloomberg survey.

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, held at 4 percent.

The yield on the government’s 9.25 percent bonds due January 2016 dropped 13 basis points, or 0.13 percentage point, to 3.84 percent, according to prices from the Philippine Dealing & Exchange Corp.

To contact the reporter on this story: Liau Y-Sing in Kuala Lumpur at yliau@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net

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