Philippine Peso Sees Best Week Since June 2012 as Surplus Climbs

The Philippine peso posted its biggest weekly gain since June last year after the current-account surplus widened and the Federal Reserve refrained from cutting stimulus that’s driven capital inflows. Bonds rose.

The balance in the broadest measure of trade climbed to $2.5 billion last quarter from $2.3 billion in the same period a year earlier, Bangko Sentral ng Pilipinas Director Rosabel Guerrero said in a media briefing in Manila today. Overseas investors bought $514 million shares this week than they sold, the largest net purchases since the five days ended June 29, 2012, based on data compiled by Bloomberg.

“We’re sitting on a pile of dollars,” said Marc Bautista, head of research at Metropolitan Bank & Trust Co. in Manila. “Money continues to come in because of the latest news from the Fed, aside from the regular flows from remittances and business process outsourcing companies. It’s inevitable the peso will strengthen once again.”

The peso surged 1.9 percent this week to 43.037 per dollar at the close in Manila, data from Tullett Prebon Plc show. The currency was little changed today after reaching 43.030 the strongest level since June 18.

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, dropped four basis points to 6.11 percent today and 61 basis points from a week ago.

The Fed’s decision to keep the size of its monthly bond purchases at $85 billion will spur inflows to emerging markets, Deputy Governor Diwa Guinigundo said at the same briefing.

The yield on Philippines 8 percent bonds due July 2031 fell 12 basis points, or 0.12 percentage point, to 4.72 percent in Manila this week, according to Tradition Financial Services. It rose two basis points today.

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