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Philippine Peso Falls to One-Year Low; Bonds Drop on Supply

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June 20 (Bloomberg) -- The Philippine peso fell to its lowest level in more than a year on speculation U.S. policy makers will scale back stimulus measures. Government bonds dropped on concern the supply of local debt will increase.

Federal Reserve Chairman Ben S. Bernanke said yesterday the central bank may taper its bond purchases this year if the U.S. economy improves further, and a gauge of manufacturing in China fell more than analysts estimated. Philippine Treasurer Rosalia de Leon today said she’s in talks with six banks on a plan to sell local-currency bonds to individuals.

“The main concern is due to the Fed tapering,” said Ryanna Berza-Talan, who helps manage about $20 billion in assets at BDO Unibank Inc. in Manila, the nation’s largest lender. “There’s also speculation about an upcoming retail-bond sale.”

The peso fell 1.3 percent to 43.80 per dollar as of the 4 p.m. close in Manila, the weakest level since June 2012, according to Bankers Association of the Philippines. The drop was the biggest since January 2001. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, rose 96 basis points, or 0.96 percentage point, to 9.28 percent.

The yield on the 8 percent bonds due July 2031 rose 15 basis points to 4.83 percent, the highest level since Feb. 11, according to Tradition Financial Services prices.

The Philippines sold a record 188 billion pesos ($4.3 billion) of 25-year retail bonds in October 2012. The Treasury will release its third-quarter auction plan before month-end.

To contact the reporter on this story: Clarissa Batino at cbatino@bloomberg.net

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

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