Peso drops in April on elec­tion jit­ters

Business Mirror - - FRONT PAGE -

THE peso com­pleted its big­gest monthly drop since Au­gust, as in­vestors sought shel­ter in the dol­lar amid un­cer­tainty over the out­come of the na­tion’s pres­i­den­tial elec­tions on May 9.

In­vestor con­cern deep­ened af­ter re­cent opinion polls showed can­di­dates with no track record in busi­ness or eco­nomics widened their lead over con­tenders that an­a­lysts have said would best steer the Philip­pine econ­omy.

There’s al­ready a big com­po­nent of the up­com­ing elec­tions in the be­hav­ior of our for­eign-ex­change mar­ket. The peso will con­tinue to fluc­tu­ate.”—Sarte

“There’s al­ready a big com­po­nent of the up­com­ing elec­tions in the be­hav­ior of our for­eign- ex­change mar­ket,” said Elfren Antonio Sarte, pres­i­dent of Rob- in­sons Bank, a unit of JG Sum­mit Hold­ings in Manila. “The peso will con­tinue to fluc­tu­ate.”

The peso closed at 46.885 per dol­lar in Manila, down 1.7 per­cent this month, prices from the Bankers As­so­ci­a­tion of the Philip­pines show. That’s the largest monthly de­cline since it slid 2.1 per­cent in Au­gust and the worst per­for­mance in Asia. It’s down 0.3 per­cent from Thurs­day.

The yield on five- year pe­so­de­nom­i­nated sovereign bonds fell six ba­sis points in April to 3.40 per­cent, and was lit­tle changed on Fri­day, ac­cord­ing to fix­ing prices from the Philip­pine Deal­ing & Ex­change Corp. It dropped 66 ba­sis points March.

Opinion polls have showed Ro­drigo R. Duterte, the con­tro­ver­sial Davao City mayor who made in­flam­ma­tory re­marks on rape and ex­tra­ju­di­cial killing, widened his lead in the pres­i­den­tial race.

“We sensed lo­cal mar­ket par­tic­i­pants have, in­deed, be­come more wor­ried of the prospect of a Duterte pres­i­dency,” Euben Paracuelles, an economist at No­mura Hold­ings Inc. in Sin­ga­pore, said in a note. “If these lo­cals are get­ting more con­cerned, this could trans­late to more sig­nif­i­cant wor­ries among for­eign in­vestors. We think a ris­ing like­li­hood of a Duterte win could add to ex­pec­ta­tions of an ad­verse mar­ket re­ac­tion.”

No­mura is poised to exit bets that the peso will ap­pre­ci­ate against the dol­lar amid in­creas­ing con­cern that the elec­tion won’t have a “be­nign out­come,” the Ja­panese bro­ker­age said in a sep­a­rate re­port is­sued on Thurs­day.

Duterte’s spokesman has sought to calm mar­ket jit­ters by say­ing un­cer­tainty usu­ally arises in the weeks be­fore an elec­tion, and it will be “busi­ness as usual” should the mayor be elected pres­i­dent. The front- run­ner will pro­vide busi­nesses the “right and proper at­mos­phere” to pros­per with­out sac­ri­fic­ing the wel­fare of the peo­ple, Peter Lav­ina said in a state­ment on Tuesday.

Bangko Sen­tral ng Pilip­inas Gov­er­nor Amando M. Te­tangco on Thurs­day said he doesn’t ex­pect any ma­jor de­vel­op­ments that would ne­ces­si­tate a shift in the cen­tral bank’s pol­icy stance. The mone­tary au­thor­ity will con­tinue to mon­i­tor pos­si­ble in­fla­tion pres­sures to en­sure price sta­bil­ity is con­ducive to a bal­anced and sus­tain­able eco­nomic growth. He fore­cast April in­fla­tion to be in a range of 0.7 per­cent to 1.5 per­cent year- on-year.

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