SINGAPORE, July 9: The Philippine peso slid on Monday after the central bank tightened liquidity rules to tackle currency speculation and most emerging Asian currencies fell on weak U.S. Jobs data.
On Saturday, the Bangko Sentral ng Pilipinas said it had toughened the rules on its short-term special deposit instrument that has attracted 1.7 trillion pesos ($40.66 billion) in funds.
Philippine authorities have expressed concern that foreign funds may have been taking advantage of the higher rates being offered by the special deposit account (SDA) facility, introduced by the central bank in 1998 to help manage liquidity in the financial system.
The peso eased 0.2 percent against the dollar on early Monday with some interbank players selling the Philippine currency, but its depreciation was smaller than that of the Malaysian ringgit and the Indonesian rupiah.
Manila’s measures ‘may have some impact on inflows to Philippines, given that SDA pays above treasury bills,’ said Enrico Tanuwidjaja, a currency strategist at Maybank in Singapore.
‘But people are still positive on the peso compared to other regional FX and they may look into other ways to get more peso exposures,’ he said. ‘If equity does not see a major sell-off because of the global easing signs, we remain positive on the peso compared to the rest.’
Manila stocks dropped 0.7 percent, while MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.8 percent.
Tanuwidjaja recommended investors buy the peso against the ringgit, the rupiah and the Thai baht.
Other analysts and dealers shared his positive view on the peso.
‘In the longer term, we see the peso as a darling right now. In risk-off mode, it does not swing. But in risk-on mode, it is reactive,’ said a European bank dealer in Singapore, who predicted it ‘will continue to be an outperformer this year.’
The peso, helped by inflows, has been the best performer among emerging Asian currencies this year, gaining 4.7 percent against the dollar.
On Monday, regional units reacted to data on Friday showing U.S. Employers added 80,000 new jobs in June, below 90,000 forecast. While the data was seen as not strong enough to prompt any immediate action, it boosted the chances of the Federal Reserve launching a new round of monetary stimulus to boost growth, a poll showed.
(agencies)
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