Philippine Peso Posts Worst 2-Day Drop Since August; Bonds FallLilian Karunungan
The Philippine peso completed its biggest two-day loss since August and bonds fell as President Benigno Aquino declared a state of calamity following the destruction and loss of life from Super Typhoon Haiyan.
The currency reached an eight-week low as the government said the devastation may hurt the economy. Countries around the world pledged aid as the number of confirmed deaths rose to 1,774. A stronger dollar and higher U.S. Treasury yields are adding pressure on the peso to weaken, Singapore-based analysts Prakriti Sofat and Hamish Pepper at Barclays Plc wrote in a research report today. The central bank’s tolerance for currency appreciation also appears to be very low, they said.
“The shock over the destruction of the typhoon and a relatively stronger dollar” prompted a sell-off in the peso, said Leong Sook Mei, Southeast Asian head of global markets research in Singapore at Bank of Tokyo-Mitsubishi UFJ Ltd.
The peso declined 0.5 percent to 43.778 per dollar in Manila, taking the two-day drop to 1.4 percent, the worst since Aug. 23, prices from Tullett Prebon Plc show. It touched 43.792 earlier, the lowest level since Sept. 17.
One-month implied volatility, a measure of expected moves in the exchange rate used to price options, increased 37 basis points, or 0.37 percentage point, to 6.04 percent.
Ten-year government bonds declined for a third day. The yield on the 11.375 percent notes due October 2023 climbed two basis points to 3.67 percent, according to noon fixing prices from Philippine Dealing & Exchange Corp. That’s the highest level in more than two weeks.
There is no plan to sell bonds to fund reconstruction, Treasurer Rosalia de Leon said in a mobile-phone message today, and the Treasury has “enough liquidity” for rebuilding.
An estimated 660,000 people have been displaced by the typhoon, John Ging, an official with the United Nations humanitarian affairs office, told reporters in New York.
Losses will be $12 billion to $15 billion, or about 5 percent of economic output, according to an estimate by Charles Watson, director of research and development at Kinetic Analysis Corp., a disaster-modeling firm. “For the Philippine islands, it is catastrophic,” Watson said in an e-mail.
The government has 18.7 billion pesos ($429 million) to fund reconstruction after Haiyan slammed into the Philippines on Nov. 8, President Aquino said yesterday in a televised address.
To continue reading this article you must be a Bloomberg Professional Service Subscriber.
If you believe that you may have received this message in error please let us know.
- Stocks Drop Most in Six Weeks on Trade War Tension: Markets Wrap
- YouTube Bans Firearms Demo Videos, Entering the Gun Control Debate
- Under Fire and Losing Trust, Facebook Plays the Victim
- Fed Lifts Rates, Steepens Path Through 2020 for More Hikes
- Comedian Byron Allen Buys the Weather Channel for $300 Million