March 6 (Bloomberg) -- Philippine peso forwards snapped a three-day drop after the Dow Jones Industrial Average climbed to a record and China pledged to maintain its economic growth target, stoking investor appetite for emerging-market assets.
Asian stocks and currencies rallied after the Dow closed 0.9 percent higher at 14,253.77 in New York as the U.S. Institute for Supply Management reported its non-manufacturing index increased to 56 last month, the highest level since February 2012. Chinese Premier Wen Jiabao set a goal for 7.5 percent expansion this year, unchanged from 2012, during the National People’s Congress in Beijing yesterday.
“You’ll probably see more funds coming into the likes of riskier currencies” like those in Asia, said Vishnu Varathan, an economist at Mizuho Corporate Bank Ltd. in Singapore. Investors are “trying to take a positive spin from what’s going on in the National People’s Congress,” he said.
Three-month non-deliverable forwards rose 0.1 percent to 40.68 per dollar as of 4:23 p.m. in Manila, data compiled by Bloomberg show. The contract is at a 0.05 percent premium to the spot rate, which was little changed at 40.700 in Manila, according to prices from Tullett Prebon Plc.
Implied volatility, a measure of expected moves in the exchange rate used to price options, increased five basis points, or 0.05 percentage point, to 3.90 percent.
Philippine central bank Governor Amando Tetangco said yesterday inflation remains manageable after consumer-price gains in February exceeded estimates. Prices rose 3.4 percent last month from a year earlier, after a 3 percent advance in January, official data showed. The median estimate of economists in a Bloomberg survey was 3.3 percent.
Policy makers have held benchmark borrowing costs at a record-low of 3.5 percent since last cutting them in October, while lowering interest rates on special-deposit accounts to curb speculation in the peso. The currency has appreciated 5.6 percent in the past year, the best performance among 25 emerging-market exchange rates tracked by Bloomberg.
“The Philippine economy is fairly well supported and there’s better risk appetite given that U.S. equities were up,” said Mizuho’s Varathan.
Government bonds rose. The yield on the 6.125 percent notes due October 2037 declined seven basis points to 4.71 percent, according to prices from Tradition Financial Services.
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