The Philippine peso completed its biggest weekly drop in more than nine years and bonds fell as concern the global economic recovery is losing steam prompted investors to seek safer bets than emerging-market assets, reported Bloomberg Friday. Global funds pulled $26 million from Philippine stocks in the last four days, adding to $48 million of net sales in the week ended May 14. Benchmark stock indexes tumbled across the region today, extending weekly slides, after U.S. reports cast doubt on a recovery in the world's largest economy and concern mounted that growth will falter in Europe as strained finances force governments to cut spending and raise taxes. “There's only one thing to do; you must de-risk,” said Marcelo Ayes, a senior vice president at treasury of Rizal Commercial Banking Corp. in Manila. “The crisis in Europe may now require a global solution. Over time, the only assets that may benefit from this crisis are gold and U.S. Treasuries.” The peso dropped 1.1 percent today to close at 46.49 per dollar in Manila, according to inter-dealer broker Tullett Prebon Plc. The currency lost 3.9 percent this week, its worst performance since October 2000, when Joseph Estrada faced mounting calls to step down as president for allegedly accepting payoffs from illegal gambling syndicates. He stepped down in January 2001 following massive street demonstrations. An index of U.S. leading economic indicators unexpectedly declined in April, while jobless claims rose last week, reports yesterday showed. Federal Reserve Governor Daniel Tarullo said Europe's debt crisis may pose a threat to the U.S. and world economies as trade shrinks and banks incur losses on European investments. ‘Short-term' slide The Philippine currency's weakness is a “short-term” reaction to Europe's debt crisis and the central bank “doesn't need to support the peso,” Deputy Governor Diwa Guinigundo said yesterday. The decline decline is caused by renewed risk aversion stemming from problems in Europe, Governor Amando Tetangco said Friday. The yield on the Philippines' 7 percent debt due January 2016 rose 1.5 basis points to 6.99 percent in Manila, according to Tradition Financial Services. The yield increased 3.5 basis points this week. The Philippines yesterday reported a budget surplus for April, paring this year's shortfall to 131.6 billion pesos ($2.8 billion). Economic growth may have accelerated to the fastest pace in a year last quarter, acting Economic Planning Secretary Augusto Santos said Thursday. The $167 billion economy likely expanded 2.9 percent to 3.9 percent from a year earlier, faster than the 1.8 percent pace in the fourth quarter, Santos said. The government will report first-quarter growth on May 27. Bangko Sentral ng Pilipinas will probably keep its benchmark overnight borrowing rate unchanged next month at a record-low 4 percent as inflation is “benign,” said Santos, a member of the central bank's policy
