The Philippine peso fell to its lowest level in more than a year on speculation US policy makers will scale back stimulus measures. Government bonds dropped on concern the supply of local debt will increase.
Federal Reserve chairman Ben Bernanke said Wedneday the central bank may taper its bond purchases this year if the US economy improves further, and a gauge of manufacturing in China fell more than analysts estimated. Philippine treasurer Rosalia de Leon on Thursday said she's in talks with six banks on a plan to sell local-currency bonds to individuals.
"The main concern is due to the Fed tapering," said Ryanna Berza-Talan, who helps manage about US$20 billion in assets at BDO Unibank in Manila, the nation's largest lender. "There's also speculation about an upcoming retail-bond sale."
The peso fell 1.3 per cent to close at 43.80 per dollar in Manila, the weakest level since June 2012, according to Bankers Association of the Philippines. The drop was the biggest since January 2001. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, rose 96 basis points, or 0.96 percentage point, to 9.28 per cent.
The yield on the 8 per cent bonds due July 2031 rose 15 basis points to 4.83 per cent, the highest level since February 11, according to Tradition Financial Services prices.
The Philippines sold a record 188 billion pesos of 25-year retail bonds in October 2012. The Treasury will release its third-quarter auction plan before month-end.
* Bloomberg News
