Philippine Peso Snaps Two-Day Gain on Intervention Speculation

The Philippine peso fell for the first time in three days on concern the central bank will curb appreciation to support exports and introduce measures to counter excessive capital inflows.

The government is discussing the impact of peso strength, Economic Planning Secretary Arsenio Balisacan told reporters in Manila today. Central bank Governor Amando Tetangco said yesterday he’s weighing more curbs on fund flows. Capital inflows have boosted Philippine stocks and fueled a 5.5 percent rally in the peso in the past 12 months, the best performance among the region’s currencies. The economy expanded 6.8 percent last quarter, official data showed today, exceeding the 6.3 percent median estimate in a Bloomberg survey.

“Expectations of intervention are leading to” weakness in Asian currencies, said Saktiandi Supaat, head of foreign-exchange research at Malayan Banking Bhd. “The peso’s decline is marginally smaller than that of other Asians because it’s supported by the better-than-expected economic data.”

The peso weakened 0.1 percent to 40.688 per dollar in Manila, according to Tullett Prebon Plc, paring this month’s gain to 0.9 percent. It reached 40.550 on Jan. 14, the strongest level since March 2008.

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, fell 20 basis points, or 0.2 percentage point, to 4.3 percent.

Foreign investors bought $620 million more Philippine stocks than they sold this month through yesterday, according to exchange data.

Government bonds were steady, with the yield on the 3.875 percent bonds due November 2019 holding at 3.73 percent, according to prices from Tradition Financial Services. The rate was 4.25 percent at the end of last year.

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