Philippine Peso Falls to 2013 Low on Speculation of More Curbs

The Philippine peso fell to its weakest level this year on speculation the central bank will implement more measures to curb capital inflows. Seven-year government bonds advanced.

Bangko Sentral ng Pilipinas will soon discuss a plan to stop foreign funds from placing money in its reverse-repurchase facility, Assistant Governor Cyd Amador said March 21. The monetary authority banned overseas investors from its special deposit accounts in July and cut the rate offered on the facilities twice this year. The BSP will monitor overseas borrowings of Philippine companies as it encourages greater utilization of domestic funds, Deputy Governor Diwa Guinigundo told reporters March 22.

“The market is waiting for clearer direction, especially when you have the central bank signaling that it could unveil more measures,” said Ricky Cebrero, head of treasury at Philippine National Bank in Manila. “The trend is still for the peso to appreciate in the long term, given the economic fundamentals.”

The peso fell 0.6 percent to 41.07 per dollar at the close in Manila, the lowest level since Dec. 28, according to Tullett Prebon Plc. It may retreat to 41.20 “in the near term,” Cebrero said. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, rose three basis points to 3.6 percent.

Consumer prices may rise 2.8 percent to 3.7 percent this month, compared with 3.4 percent in February, BSP Governor Amando Tetangco said yesterday. In a March 22 speech e-mailed by Tetangco’s office today, he forecast faster economic growth this year amid manageable inflation and low interest rates.

SDA Rate

The $225 billion economy grew 6.6 percent in 2012, the fastest pace in Asia after China. Growth may be 6 percent to 7 percent this quarter, Economic Planning Secretary Arsenio Balisacan said yesterday.

“The use of the SDA rate hasn’t been fully exploited or maximized, so we will be reviewing the situation on a continuing basis,” Tetangco told Bloomberg Television on March 15, a day after he cut the SDA rate to 2.5 percent from 3 percent and set a unified rate of 3.5 percent for all tenors in the reverse-repurchase window.

The yield on the 7.75 percent bond due February 2020 fell five basis points, or 0.05 percentage point, to 3.31 percent, according to midday fixing prices at Philippine Dealing & Exchange Corp.

There were 1.93 trillion pesos ($47 billion) in the central bank’s special deposit accounts and 280.9 billion pesos of reverse repurchases outstanding as of March 8, latest data show.

Financial markets will be shut on March 28 and 29 for the Easter holiday.

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