Wed, Feb 14, 2007 - Page 11 News List

Philippine peso declines as foreign funds sell off stocks

BLOOMBERG

The Philippine peso declined on speculation overseas investors will keep reducing holdings of the nation's stocks. South Korea's won also weakened.

Fund managers outside the Philippines sold more local shares than they bought for three days through Monday, the longest net sales since last November, according to the stock exchange.

Inflation eased to the slowest in more than three years last month, a report showed last week, giving the central bank more scope to cut interest rates.

"Stocks and the rate-cut speculation are both negative for the peso," said Minoru Shioiri, a senior manager of the foreign-exchange trading and credit division at Mitsubishi UFJ Securities Co in Tokyo. "Technically, the peso also seems to be under a downward correction."

The peso dropped 0.3 percent to 48.51 against the dollar as of 4:03pm in Manila, according to data compiled by Bloomberg.

The currency may slide to 48.80 this week, Shioiri said.

Global investors sold a net US$15.9 million in local stocks in the three days to Monday. The Philippine Stock Exchange Index declined 0.01 percent yesterday, adding to Monday's 0.4 percent drop and a 0.7 percent slide last week.

Philippine consumer prices rose 3.9 percent last month from a year earlier, the slowest since December 2003, the National Statistics Office said last Tuesday.

The slowdown confirmed the central bank's "inflation outlook" and gives policy makers "additional flexibility," central bank Governor Amando Tetangco said in a statement that day.

South Korea's won weakened to the lowest this month on speculation overseas investors will repatriate the proceeds from equity sales.

The won fell for a second day, reversing a gain, as stock exchange data showed fund managers outside of South Korea sold more shares than they bought for four straight days and last Thursday dumped the most in a month. The benchmark Kospi index of stocks, down 1 percent this year, on Monday had its biggest loss since Jan. 19.

The won dropped 0.2 percent to 939.50 against the dollar at the 3pm close of onshore trading, according to Seoul Money Brokerage Services Ltd.

Elsewhere, the New Taiwan dollar slid 0.2 percent to NT$33.081 on turnover of US$1.01 billion, the Indonesian rupiah fell 0.4 percent to 9,076 and the Singapore dollar slid 0.1 percent to S$1.5425.

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