Philippine Peso Depreciates a Fourth Day on Intervention Concern

The Philippine peso declined for a
fourth day, the longest stretch of losses this year, on concern
the central bank will curb appreciation to support exports and
shore up the value of remittances from overseas workers.

The currency touched a two-week low of 40.760 per dollar
today as Governor Amando Tetangco said last week the monetary
authority will participate in the foreign-exchange market to
smooth sharp movements in the peso. Bangko Sentral ng Pilipinas
reduced the interest paid on almost 1.7 trillion pesos ($42
billion) in its special-deposit accounts to 3 percent on Jan. 24
and Credit Suisse Group AG said the cut will help curb currency
and spur lending.

“For the moment, the peso is just range-bound,” said
Rafael Algarra, executive vice president at Security Bank Corp. (SECB)
in Manila. “We’ve seen how the central bank has actually curbed
the excess strength. Prospects for the Philippines continue to
be good and we should probably see more inflows.”

The peso fell 0.1 percent to 40.695 per dollar as of 11:06
a.m. in Manila, according to Tullett Prebon Plc. The currency
reached 40.550 on Jan. 14, the strongest level since March 2008.

The peso has advanced 5 percent in the past year, the best-
performance among Asia’s 11 most-active currencies, according to
data compiled by Bloomberg.

The economy probably expanded 6.3 percent in the three
months through December from a year earlier, after an increase
of 7.1 percent in the prior quarter, according to the median
estimate of economists in a Bloomberg News survey before a
government report due Jan. 31.

One-month implied volatility, a measure of expected moves
in the exchange rate used to price options, rose 10 basis
points, or 0.10 percentage point, to 4.1 percent today.

The yield on the government’s 8.125 percent notes due
December 2035 held at 5.4 percent, according to prices from
Tradition Financial Services.

To contact the reporter on this story:
Lilian Karunungan in Singapore at

To contact the editor responsible for this story:
James Regan at

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