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Philippine Peso Gains as Stock Rally Boosts Inflows to Equities

July 1 (Bloomberg) -- The Philippine peso rose for a fifth day on speculation a rally in the benchmark stock index will attract more overseas funds.

Foreign investors bought $91 million more shares than they sold last week, having been net sellers in the previous three weeks, exchange data show. The Philippine Stock Exchange Composite Index climbed 1 percent today, a fourth day of gains. Bonds due 2031 declined.

“There have been some positive flows coming to the Philippines,” said Rafael Algarra, executive vice president and head of financial markets at Security Bank Corp. in Manila. “Fundamentally, the Philippines is still showing positive economic figures.”

The peso appreciated 0.2 percent to 43.115 per dollar in Manila and touched 43.060, the strongest level since June 18, Tullett Prebon Plc data show. The peso lost 5.5 percent last quarter, the third-worst performance in Asia after the Indian rupee and Thai baht.

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, declined 27 basis points, or 0.27 percentage point, to 7.65 percent today.

Gross domestic product increased 7.8 percent in the first quarter, the fastest in Asia, while Economic Planning Secretary Arsenio Balisacan told reporters last week in Manila that growth this year will be within the 6 percent to 7 percent target.

The government reports May remittances data for Filipinos working abroad on July 15. The funds, which contribute about 10 percent to the Philippine economy, increased 6.1 percent in April from a year earlier, central bank figures showed June 17.

The yield on the 8 percent sovereign bonds due July 2031 rose 13 basis points to 4.95 percent, according to prices from Tradition Financial Services.

To contact the reporter on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net

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

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