Philippine Peso Falls, Approaching 18-Month Low; Bonds Decline

By Clarissa Batino

Oct. 21 (Bloomberg) -- The Philippine peso fell, approaching the lowest level in 18 months, on speculation slowing economic growth will shrink company earnings and deter overseas investors. Government bonds declined.

The currency extended four weeks of losses after the government yesterday announced its biggest monthly budget deficit this year as revenue fell short of its target. Sales at local telephone companies may slow as the weakening global economy threatens the jobs of Filipinos working overseas, BusinessWorld newspaper reported today.

``We will probably see growth in remittances slowing dramatically by next year and, along with dwindling electronics exports, the inflow to the country could be drying up,'' said Radhika Rao, an economist at IDEAglobal Ltd. in Singapore. At the same time, ``we're still seeing net outflows from local stocks.''

The peso declined 0.2 percent to 48.16 per dollar as of 12:19 p.m. in Manila, according to Tullett Prebon Plc. It touched 48.27 yesterday, the weakest since April 2007, according to the Bankers Association of the Philippines.

The government had a shortfall of 21.6 billion pesos ($449 million) for September, resulting in a deficit of 53.4 billion pesos for the first nine months of the year, Finance Secretary Gary Teves said yesterday in Manila.

The peso may rally to around 47 per dollar by year-end as remittances increase before the Christmas holiday, IDEAglobal's Rao said.

Ten-year government bonds fell for a fourth day before the government sells similar-dated notes today.

The yield on the 5.125 percent note due January 2018 rose 8 basis points to 8.44 percent, according to the 11:15 a.m. fixing at Philippine Dealing & Exchange Corp. The price declined 0.46, or 46 pesos per 10,000 pesos face amount, to 83.74. A basis point is 0.01 percentage point.

To contact the reporter on this story: Clarissa Batino in Manila at cbatino@bloomberg.net.