The Philippine peso declined the most in four months on concern the central bank will curb appreciation to support exports and shore up the value of remittances from overseas workers.
Governor Amando Tetangco said last week the monetary authority will participate in the foreign-exchange market to smooth sharp movements in the peso. The Philippine currency extended losses in late trading, tracking declines in regional currencies, as the yen’s slide to a 2 1/2-year low fanned speculation Asian central banks will seek weaker exchange rates.
“We’ve seen how the central bank has actually curbed the excess strength” of the peso, said Rafael Algarra, executive vice president at Security Bank Corp. in Manila. “Prospects for the Philippines continue to be good and we should probably see more inflows.”
The peso fell 0.6 percent to 40.915 per dollar in Manila, the weakest level since Jan. 7, according to Tullett Prebon Plc. The currency reached 40.550 on Jan. 14, the strongest level since March 2008.
“Today’s movement is more affected by the yen sell-off,” said Leong Sook Mei, the Southeast Asian head of global markets research in Singapore at Bank of Tokyo-Mitsubishi UFJ Ltd. “This is a short-term thing.”
Bangko Sentral ng Pilipinas reduced the interest paid on almost 1.7 trillion pesos ($41.5 billion) in its special-deposit accounts to 3 percent on Jan. 24 and Credit Suisse Group AG said the cut will help curb currency speculation and spur lending. The peso has advanced 4.7 percent in the past year, the best-performance among Asia’s 11 most-active currencies, according to data compiled by Bloomberg.
The Philippine economy probably expanded 6.3 percent in the three months through December from a year earlier, after an increase of 7.1 percent in the prior quarter, according to the median estimate of economists in a Bloomberg News survey before a government report due Jan. 31.
One-month implied volatility, a measure of expected moves in the exchange rate used to price options, rose 10 basis points, or 0.10 percentage point, to 4.1 percent today.
The yield on the government’s 8.125 percent notes due December 2035 dropped 10 basis points to 5.3 percent, according to prices from Tradition Financial Services.