Philippine Peso Declines a Third Day on Intervention Concern

The Philippine peso slipped for a third day on concern the central bank will intervene to curb its advance. Government bonds due 2037 were unchanged.

The central bank will maintain a strategic presence in the foreign-exchange market and adopt prudential measures to ensure the exchange rate is aligned with fundamentals, Governor Amando Tetangco said Feb. 15. The peso has advanced 4.6 percent in the past year, the best performance among Asia’s 11 most-active currencies. The country recorded a balance of payments surplus of $2 billion in January, compared with $640 million the month before, the central bank reported yesterday.

“The market is a little bit more cautious as the central bank has been signaling intervention,” said Saktiandi Supaat, head of foreign-exchange research at Malayan Banking Bhd. in Singapore. “The peso has already moved a lot.”

The peso dropped 0.1 percent to 40.655 per dollar in Manila, according to prices from from Tullett Prebon Plc. The currency touched 40.55 on Jan. 14 and Feb. 14, the strongest level since March 2008.

“The BOP surplus is reiterative of our stance that the peso will strengthen this year,” said Leong Sook Mei, the Southeast Asian head of global markets research at Bank of Tokyo-Mitsubishi UFJ Ltd. in Singapore. “But we don’t expect it to run at the same pace as last year. The central bank has made it clear that it doesn’t want the currency to gain as much.”

The peso has advanced 1.1 percent against the dollar this year after rallying 6.8 percent in 2012, the most since 2007.

One-month implied volatility in the peso, a measure of expected moves in the exchange rate used to price options, dropped 15 basis points, or 0.15 percentage point, to 3.85 percent, according to data compiled by Bloomberg.

The yield on the 6.125 percent bonds due October 2037 held at 4.87 percent, according to prices from Tradition Financial Services.

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