Philippine Peso Weakens Most in Five Months as Outflows Quicken

The Philippine peso fell the most in five months as central bank data showed outflows accelerated in May.

The currency dropped 0.5 percent to 45.15 a dollar in Manila, prices from the Bankers Association of the Philippines show. That’s the biggest decline since Jan. 5 and the lowest close since March 2014. The peso declined 1.3 percent in June.

There were $569 million of net portfolio outflows last month, compared with $31 million in April, Bangko Sentral ng Pilipinas said Thursday. The peso is market-determined and the monetary authority is comfortable with that, Deputy Governor Diwa Guinigundo said in an interview in Manila on Wednesday.

“We’ve been seeing a trickle out of Philippine assets,” said Alan Cayetano, head of foreign-exchange trading at Bank of the Philippine Islands in Manila. “We’re looking at higher levels for the dollar versus the peso.”

The Philippine economy doesn’t need additional monetary policy support at this time, Guinigundo said, suggesting the central bank will refrain from cutting borrowing costs at its June 25 meeting. Gross domestic product increased by the least in three years in the first quarter.

Rising oil prices and drier weather from the El Nino weather pattern are adding inflationary pressure, although it’s expected to remain within the central bank’s 2 percent to 4 percent target, Guinigundo said. Consumer prices rose 1.6 percent in May from a year earlier.

The yield on the nation’s five-year government bonds advanced one basis point to 3.90 percent, according to an end-of-day fixing from Philippine Dealing & Exchange Corp. The rate fell two basis points this week. Local financial markets will be shut Friday for the Independence Day holiday.

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