Friday, July 6, 2012

EM ASIA FX-Peso rises on S&P upgrade, most Asia FX ease before ECB

..SINGAPORE, July 5 (Reuters) - The Philippine peso rose on

Thursday, a day after Standard & Poor's Ratings Services raised

its credit rating on the country to one notch below investment

grade, while most of its Asian peers eased ahead of the European

Central Bank's rate decision.

S&P upgraded the long-term sovereign credit rating of the

Philippines to BB plus from BB with a stable outlook late on

Wednesday, a move likely to boost bonds and currency trades and

further lift an equity market that has hit new peaks this


The move helped the peso rise 0.6 percent to 41.600 against

the dollar on Thursday, although the local unit gave up some of

the gains on caution over possible dollar-buying intervention by

the central bank. The peso stood at 41.69 by 0310 GMT.

"The market is right now being cautious as they suspect

agent banks (of the central bank) of supporting the dollar and

after a dollar-short squeeze yesterday. Traders are just sitting

on offers but not trying to push dollar/peso lower," said a

European bank dealer in Manila.

"But I would assume that there will be fresh inflows,

especially in the fixed income market. The equity market would

also rally with the upgrade," the dealer said, adding he was

looking to buy the peso on dips.

Manila stocks rose 0.3 percent, outperforming

Asia-Pacific shares outside Japan which fell 0.5


The three-year Philippine government bond yield

eased 1 basis point to 3.961 percent.

Many traders and analysts said the peso has factored the

upgrade in, to some degree, but the rise could be a further

booster for the domestic currency.

"It is sort of priced in as Fitch has them at BB plus. But

not all," said BNP Paribas currency strategist Thio Chin Loo in

Singapore, adding that the peso was expected to stay firm with a

target of 40.00 by end of this year.

The peso is the best performing emerging Asian currency so

far this year with a 5.1 percent gain against the dollar, thanks

to inflows.


Change on the day at 0310 GMT

Japan yen 79.86 79.87 +0.01

Sing dlr 1.2669 1.2664 -0.04

Taiwan dlr 29.856 29.866 +0.03

Korean won 1137.30 1135.80 -0.13

Baht 31.55 31.48 -0.22

Peso 41.69 41.83 +0.34

Rupiah 9385.00 9370.00 -0.16

Rupee 54.48 54.48 +0.00

Ringgit 3.1678 3.1525 -0.48

Yuan 6.3530 6.3477 -0.08

Change so far in 2012

Currency Latest bid End prev year Pct Move

Japan yen 79.86 76.92 -3.68

Sing dlr 1.2669 1.2969 +2.37

Taiwan dlr 29.856 30.290 +1.45

Korean won 1137.30 1151.80 +1.27

Baht 31.55 31.55 +0.00

Peso 41.69 43.84 +5.16

Rupiah 9385.00 9060.00 -3.46

Rupee 54.48 53.08 -2.57

Ringgit 3.1678 3.1685 +0.02

Yuan 6.3530 6.2940 -0.93

(Reporting by Jongwoo Cheon, Additional reporting by Saikat

Chatterjee in HONG KONG; Editing by Jacqueline Wong)

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