The peso capped a good week on Friday with a slight gain in the average trading value to 44.815 from 44.822 versus the dollar. This gave the local currency its first weekly advance since August on speculation a sell-off of the nation’s stocks is coming to an end.
Overseas investors have been net buyers of local shares in the last two days, following 15 straight days of outflows, exchange data show. The nation’s good economic fundamentals will continue to support the peso, Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr. said on Bloomberg Television on Friday. The Philippines reported a $17-million trade deficit for August, less than the median estimate in a Bloomberg survey for a $100-million shortfall.
“The risk aversion is tapering off,” said Jonathan Ravelas, chief market strategist at Manila-based BDO Unibank Inc. “The market is slowly moving back to reality.”
The peso appreciated 0.2 percent this week to 44.823 per dollar as of 12:16 p.m. in Manila, prices from Tullett Prebon Plc. show. The currency was little changed on Friday and lost 2.9 percent in a run of seven weekly declines ended October 17. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, dropped 44 basis points, or 0.44 percentage point, this week to 6.04 percent.
Foreign funds pulled $545 million from local stocks this month, as investors prepared for the Federal Reserve (the Fed) to end its stimulus program and start raising US interest rates next year. The Fed, which indicated in September that it plans to end bond purchases this month, next meets on October 28 and 29.
Ten-year benchmark government notes headed for a sixth weekly gain as the central bank on Thursday held its benchmark rate at 4 percent, refraining from adding to two previous increases as price pressures eased. The central bank may extend a pause in interest-rate increases for the rest of this year if inflation remains manageable, Tetangco said on Friday.
The yield on the 4.125-percent sovereign securities due August 2024 fell two basis points this week to 4.18 percent, according to noon fixing prices from Philippine Dealing & Exchange Corp. The rate increased one basis point on Friday.