The Philippine peso gained for a third day, paring losses this month, on optimism government spending will boost economic growth in the Southeast Asian nation.
The Philippine peso advanced for a third day as the government pledged faster economic growth with state spending. Bonds advanced.
The government will "pump prime" the economy and growth will improve in the remainder of the year, President Benigno Aquino said yesterday. Gross domestic product rose 4.9 percent in the three months to March from a year earlier after having increased 7.1 percent in the previous quarter, government data showed yesterday. The Philippine economy will expand 5.7 percent this year, Standard Chartered Plc said in a report today.
"As the government steps up spending, growth will probably improve from the first quarter, which was a relatively decent number," said Manu Goseco, a treasurer at East West Bank Corp. in Manila.
The peso gained 0.1 percent to 43.272 per dollar as of the 4 p.m. close of trading in Manila, according to Tullett Prebon Plc. The currency dropped 1.1 percent this month, snapping a three-month rally.
Banks that engage in non-deliverable forward transactions in the foreign-exchange market must submit a daily report, the central bank said on its website. The peso, which rose as much as 0.3 percent today, pared those gains after Governor Amando Tetangco said policy makers seek a clearer picture of the derivatives.
"There's a bit of ambiguity on the circular and the uncertainty has a knock-on effect on the peso," said Rafael Algarra, executive vice president at Security Bank Corp. "It should settle down once things are clarified."
The yield on the 6.25 percent January 2014 peso bond fell two basis points, or 0.02 percentage point, to 4.93 percent, according to Tradition Financial Services. The rate increased 50 basis points from the end of April.
The nation’s economy grew 4.9 percent in the first quarter from a year earlier, compared with a revised 6.1 percent expansion in the previous three months, the government reported today. Remittances, which account for more than 10 percent of the economy, increased 4.1 percent in March from a year earlier, the central bank said May 16. The peso weakened 1.2 percent this month as Europe’s debt crisis spurred investors to favor safe- haven assets.
“Fundamentals are solid” even as government spending faltered in the last quarter, said Marcelo Ayes, senior vice president at Rizal Commercial Banking Corp. in Manila. “The peso seems to be dictated not much by internal news, but external news. The elevated risk aversion is still there due to uncertainty over Greece.”
The peso appreciated 0.1 percent to 43.315 per dollar at the 4 p.m. close in Manila, according to prices from inter- dealer broker Tullett Prebon Plc. The currency touched 43.585 on May 25, the weakest level since March 29.
Philippine economic growth will probably quicken this quarter as the government catches up on spending, Economic Planning Secretary Cayetano Paderanga told reporters today in Manila.
The government will “pump prime” the economy starting this quarter and growth will improve in the remainder of the year, President Benigno Aquino also said today. Power and infrastructure investment will be coming in and crises in the Middle East and Japan weighed on the domestic economy, Aquino said.
The yield on the 6.25 percent note due January 2014 held at 4.95 percent, according to Tradition Financial Services.
Written by Makisig Bayani
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