Philippine two-year bonds fell the most since May on concern the central bank may start tightening policy and after Federal Reserve Chair Janet Yellen said the U.S. monetary authority may raise interest rates.
The Philippine central bank’s scope to keep interest rates steady has narrowed as domestic liquidity increases and borrowing costs edge up globally, Bangko Sentral ng Pilipinas Governor Amando Tetangco said.
The Philippine central bank will keep the option of another cut in the rate it pays for funds in so-called special deposit accounts, Governor Amando Tetangco said three weeks before the next policy meeting. The peso fell.
Thailand’s decision to expand subsidies for rice and rubber farmers to quell protests is undermining efforts to control rising debt, even as governments in neighboring Malaysia and Indonesia cut back support programs.
Indonesia’s bonds fell, pushing the 10-year yield to the highest since March 2011, on speculation the central bank will raise borrowing costs for a second month. The rupiah dropped to the weakest level since September 2009.