Philippine Peso Retreats on Remarks That Supreme Court Decision Will Hurt Economy

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Philippine Peso Retreats on Remarks That Supreme Court Decision Will Hurt EconomyThe Philippine peso plunged to its weakest level in nearly two weeks after President Benigno Aquino expressed concern that a Supreme Court ruling that blocked certain government expenditure will negatively affect the economy.

The peso plunged 0.3 percent to trade at 43.610 per dollar in Manila after earlier declining to 43.665, its lowest level since July3. The currency’s 1-month implied volatility, which measures the expected swings in the exchange rate that is used to value options, rose 0.17 percentage point, or 17 basis points, to 4.49 percent.

The Supreme Court on July 1 voided sections of the Disbursement Acceleration Program, which is an infrastructure spending program that was approved in 2011. Nonetheless, Aquino remained defiant, saying the government will file an appeal.

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“Now that the DAP is in the spotlight, it becomes a little bit more complex for the government to be continuously aggressive with spending,” Emilio Neri, a Manila-based economist at Bank of the Philippine Islands told Bloomberg.

Philippines’ economy grew 5.7 percent in the first three months of the 2014 from a year ago, the weakest pace since 2011. The yield on the nation’s 12.375% government bonds that mature on June 2024 remained slightly unchanged at 4.17%

Meanwhile, the ruble plunged after the European Union and the U.S. plotted further sanctions against Russia. EU ambassadors met at the White House on Monday for closed-door meeting where the U.S. strongly advocated for tougher sanctions to stop what U.S. officials termed as Russia’s destabilizing moves in Ukraine.

The currency retreated 0.1 percent to 34.3625 per dollar as of 2 p.m. local time. Kiev had earlier blamed Russian military for shooting one of its military planes to boost the pro-Russian militants. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Yashu Gola at yashu@forexminute.com