Philippine Peso Drops to One-Week Low on Europe; Bonds Advance

The Philippine peso dropped to a one-week low as concern the euro’s strength will hamper global economic growth deterred risk-taking. Government bonds gained.

European Central Bank President Mario Draghi said yesterday the euro’s gain could stymie a recovery in the region before it has begun by curbing exports. The single currency rose almost 3 percent against the dollar last month. The peso advanced 0.1 percent from Feb. 1 as international investors bought $96 million more local stocks than they sold this week through yesterday, exchange data show.

“If there are worries about Europe, then all Asian currencies get affected, including the peso,” said Rafael Algarra, executive vice president at Security Bank Corp. in Manila. “It’s more external, not anything domestic, that’s affecting the peso. We still expect a strong peso for most of this year.”

The peso fell 0.1 percent to 40.677 per dollar in Manila, according to Tullett Prebon Plc. The currency reached 40.732 earlier, the weakest level since Feb. 1. It has gained 0.9 percent this year, the third-best performance among Asia’s 11 most-active currencies.

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, fell five basis points, or 0.05 percentage point, to 4.25 percent this week and was little changed today.

Gross domestic product increased 6.6 percent last year, compared with 2011’s 3.9 percent pace, the government reported on Jan. 31.

The yield on the government’s 6.125 percent bonds due October 2037 fell six basis points this week to 5.04 percent, according to prices from Tradition Financial Services. The rate dropped one basis point today.

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