The Philippine peso rose the most in more than three months on speculation overseas remittances picked up during the holiday period.
Philippine peso gains most in three months on remittances spike
The Philippine peso rose the most in more than three months on speculation overseas remittances picked up during the holiday period. Government bonds gained.
Funds sent home by Filipinos overseas, which make up about 10 per cent of the Philippine economy, grew 5.8 per cent from a year earlier to $17.5 billion in the 10 months through October, official data show. The peso appreciated 6.8 per cent last year, its best performance since 2007. Local financial markets were shut December 31 and January 1 for the New Year holidays.
"This is the normal build-up of dollar supply over the long weekend from overseas remittances that have been converted into pesos," said Joey Cuyegkeng, an economist in Manila at ING Groep NV.
The peso strengthened 0.5 per cent to 40.853 per US dollar at the close in Manila from December 28, the biggest gain since September 14, according to Tullett Prebon. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, fell 20 basis points, or 0.2 percentage point, to 4.3 per cent.
The Bloomberg-JPMorgan Asia Dollar Index gained 0.2 per cent today after the US House approved a bill averting income tax increases for more than 99 per cent of households, which could have triggered a recession in the world's largest economy. The passage is a victory to the US president Barack Obama even as Republicans vowed to fight him in coming weeks for spending cuts in exchange for raising the debt ceiling.
The yield on the Philippines' 6.125 per cent bonds due October 2037 fell three basis points, or 0.03 percentage point, to 5.57 per cent, according to prices from Tradition Financial Services.
* Bloomberg News