The Philippine peso fell the most in a week on concern a slump in government spending will deepen the nation’s economic slowdown.
The country had a budget surplus of 80.9 billion pesos ($1.4 billion) in April, the biggest excess since at least June 1994, the finance department reported today, citing a 6 percent drop in spending due to lower interest expenses.
The data show expenditures, after debt payments, grew only 0.5 percent after an average 14 percent increase in the first quarter, according to Joey Cuyegkeng, an economist at ING Groep NV.
“Government spending has actually collapsed and it doesn’t look good for second-quarter gross domestic product,” Manila-based Cuyegkeng said.
“The peso could depreciate further. Portfolio investors may opt to cash in at the moment.”
The peso declined 0.2 percent to 43.908 per dollar as of noon in Manila, paring its advance this quarter to 2.1 percent, according to Tullett Prebon Plc.
One-month implied volatility, a measure of expected moves in the exchange rate used to price options, rose 19 basis points, or 0.19 percentage point, to 4.88 percent.
Philippine economic growth in the three months through March slipped below 6 percent for the first time in nine quarters, official data showed last week. GDP increased 5.7 percent after a 6.3 percent gain in the previous period.
The median estimate in a Bloomberg survey was 6.4 percent. Three-year government bonds gained for a second day.
The yield on the benchmark 2.875 percent notes due May 2017 dropped three basis points to 2.91 percent, according to noon fixing prices from the Philippine Dealing Exchange Corp.
“Interest rates should remain relatively low” as the economy slows, Cuyegkeng said.
bloomberg.com
The country had a budget surplus of 80.9 billion pesos ($1.4 billion) in April, the biggest excess since at least June 1994, the finance department reported today, citing a 6 percent drop in spending due to lower interest expenses.
The data show expenditures, after debt payments, grew only 0.5 percent after an average 14 percent increase in the first quarter, according to Joey Cuyegkeng, an economist at ING Groep NV.
“Government spending has actually collapsed and it doesn’t look good for second-quarter gross domestic product,” Manila-based Cuyegkeng said.
“The peso could depreciate further. Portfolio investors may opt to cash in at the moment.”
The peso declined 0.2 percent to 43.908 per dollar as of noon in Manila, paring its advance this quarter to 2.1 percent, according to Tullett Prebon Plc.
One-month implied volatility, a measure of expected moves in the exchange rate used to price options, rose 19 basis points, or 0.19 percentage point, to 4.88 percent.
Philippine economic growth in the three months through March slipped below 6 percent for the first time in nine quarters, official data showed last week. GDP increased 5.7 percent after a 6.3 percent gain in the previous period.
The median estimate in a Bloomberg survey was 6.4 percent. Three-year government bonds gained for a second day.
The yield on the benchmark 2.875 percent notes due May 2017 dropped three basis points to 2.91 percent, according to noon fixing prices from the Philippine Dealing Exchange Corp.
“Interest rates should remain relatively low” as the economy slows, Cuyegkeng said.
bloomberg.com
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