Philippine Peso Heads for Quarterly Gain on Remittances Boost

The Philippine peso is set to be the only Asian currency apart from the Hong Kong dollar to strengthen this quarter, supported by a seasonal increase in remittances.

Money sent home from abroad, which accounts for about 10 percent of the economy, usually peaks in the fourth quarter as some 10.5 million Filipinos living overseas send cash to their families before Christmas. The slump in global oil prices, a recent debt-rating upgrade from Moody’s Investors Service and stable inflation are also supporting the peso, said Alan Cayetano, head of foreign-exchange trading at Bank of the Philippine Islands in Manila.

“All these add up to less dollar demand, more supply and increased investor confidence,” he said. “The peso may still succumb to the strong dollar trend in 2015 but the market expects stability in the currency compared with its emerging-market peers.”

The peso fell 0.2 percent to 44.750 a dollar as of the midday break in Manila, paring its gain since the end of September to 0.3 percent, according to Tullett Prebon Plc data. It has weakened 0.8 percent this year. Local markets will shut tomorrow for the New Year holidays and reopen Jan. 5.

Inflation cooled to 3.7 percent in November, the slowest pace in 12 months, and will ease to 3.1 percent this month, according to the median estimate in a Bloomberg survey before data due next week.

The Philippines plans to sell dollar bonds in early 2015, Treasurer Rosalia de Leon said last month. Nine banks were tapped for the benchmark-sized offer, according to people familiar with the details who are not authorized to speak publicly.

The yield on benchmark two-year local-currency sovereign notes fell 14 basis points, or 0.14 percentage point, to 3.06 percent, according to fixing prices from Philippine Dealing & Exchange Corp. The yield has risen 54 basis points this year as the central bank raised its policy rate by 50 basis points, in two increases, to 4 percent.

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