PHILIPPINE 25-year bonds fell the most in more than a week on speculation demand for the notes will weaken as the government sells more debt. The peso strengthened.
Yields on the 7.625-percent debt due September 2036 climbed to the highest level since Oct. 13 as the Bureau of the Treasury prepares to auction P9 billion ($208 million) of the securities Tuesday. The government rejected bids for 91-day bills for a second straight auction last week after selling about 110 billion pesos of bonds to individuals.
The yield on the 7.625 percent 25-year debt rose six basis points, or 0.06 percentage point, to 7.57 percent, according to midday fixing prices at Philippine Dealing and Exchange Corp. That was the biggest increase since Oct. 13.
The peso rose 0.4 percent to 43.268 per dollar at close of trading, Tullett Prebon Plc prices showed, on speculation Europe’s policy makers will contain the region’s debt crisis.
The Philippine government may raise its budget for stimulus spending by about P20 billion, Budget Secretary Butch Abad said on Oct. 17, five days after President Benigno Aquino unveiled a P72.1-billion package to boost increase public works and reduce poverty.
The government approved about P6.3 billion in spending to upgrade Manila’s commuter rail system, Abad said Monday.
Meanwhile, other Asian currencies gained the most in a week after European leaders outlined plans to contain their region’s debt crisis and as a private gauge signaled China’s factory output grew this month.
South Korea’s won led the advance in exchange rates as the MSCI Asia-Pacific Index of regional stocks rallied 2.6 percent. European officials rejected a forced restructuring of Greek debt at an Oct. 23 meeting in Brussels, inching toward plans to shore up banks’ capital at the next meeting on Oct. 26. China’s purchasing managers’ index probably rose to 51.1 from 49.9 last month, indicating the first expansion since June, according to a preliminary reading released today by HSBC Holdings Plc.
“The data flow from most major economies has improved of late,” Adrian Foster, head of financial-market research for Asia at Rabobank Groep NV in Hong Kong, said in a research note Monday. The so-called Flash PMI “signals that the downdraft from China’s loss of growth momentum has passed.”
The won closed 1.1 percent stronger at 1,134.60 per dollar in Seoul, according to data compiled by Bloomberg. The ringgit and Taiwan’s dollar appreciated 0.5 percent to each 3.1335 and NT$30.133, respectively. The Bloomberg-JPMorgan Asia Dollar Index climbed 0.3 percent, the most since Oct. 14.
A US Commerce Department report on Oct. 27 will show the world’s biggest economy grew at an annualized 2.5 percent last quarter, after advancing 1.3 percent in the preceding three months, according to a Bloomberg survey. The Federal Reserve may undertake a third round of bond purchases to support economic growth if warranted, Vice Chairman Janet Yellen said on Oct. 21.
The won rose for the first time in three days as Japan reported today its exports rose 2.4 percent last month from a year earlier, beating the median estimate of 26 economists in a Bloomberg survey for a 1 percent increase.
“The won will gain as investors look forward to discussions at the second summit this week” in Europe, said Lee Jung Hyun, a currency trader at Industrial Bank of Korea in Seoul. “Europe is still on its way to agreement.”
Taiwan’s dollar strengthened the most in a week as a government report showed the island’s unemployment rate fell to a three-year low of 4.27 percent in September. The median estimate of 10 economists in a Bloomberg News survey was for a jobless rate of 4.4 percent. Industrial production climbed 1.62 percent last month from a year earlier, the slowest pace in two years, a separate report showed today. Economists predicted a 6.1 percent increase.
India’s rupee appreciated 0.2 percent to 49.910 per dollar in Mumbai, extending its rebound from a 30-month low touched Oct. 21, on speculation the central bank will raise interest rates tomorrow for a seventh time this year, boosting the yield advantage on local assets.
The Reserve Bank of India will raise its repurchase rate to 8.5 percent from 8.25 percent, according to 15 or 23 economists in a Bloomberg survey. Eight predict no change. Overseas funds pumped $4.4 billion into local bonds this year, boosting holdings to a record last month, as the extra yield on 10-year sovereign notes rose 200 basis points to 662 over U.S. Treasuries.
China’s yuan strengthened 0.13 percent to 6.3754S per dollar in Shanghai. The currency earlier gained as much as 0.26 percent on speculation policy makers will tolerate further gains to combat inflation.
China must continue efforts to control food and housing prices and maintain economic development and social stability, Premier Wen Jiabao said in a statement posted on the government’s website Oct. 22.
“Wen’s comments show that China still puts tackling inflation as its top priority,” said Stella Lee, the Hong Kong- based president of Success Futures & Foreign Exchange Ltd. “That’s positive for the yuan as a stronger currency can help lower imported costs.”
Elsewhere, Indonesia’s rupiah appreciated 0.3 percent to 8,841 per dollar, according to prices from local banks compiled by Bloomberg. Vietnam’s dong rose 0.2 percent to 20,953. Thailand’s financial markets were closed Monday for a public holiday.
