Peso rises to 42.02 vs US dollar, highest in 11 monthsBy Michelle V. Remo
Philippine Daily Inquirer
MANILA, Philippines—The peso strengthened to its highest level in 11 months as Europe’s announcement of new measures to address the eurozone debt crisis boosted demand for emerging-market securities, such as peso-denominated stocks and bonds.
The local currency broke into the 41-to-a-dollar territory during intraday trade, and then closed at 42.02 against the greenback. This close was up by 10 centavos from Friday’s finish of 42.12:$1.
Intraday high on Monday hit 41.95:$1, while intraday low settled at 42.05:$1. Volume of trade amounted to $883.65 million from $1.15 billion previously.
Monday’s close was the highest in 11 months. The last time the peso hit stronger than 42.02 against the US dollar was last August 2, when it finished at 41.95:$1.
Traders said the rise of the peso, which came together with the appreciation of other key Asian currencies, came following the meeting of European Union leaders last week in Brussels where they discussed moves to prevent a worsening of the financial woes of European banks, led by those in Spain.
One of the major agreements made by European leaders was for the EU to directly extend loans to banks, thereby not increasing the debt burden of already troubled European governments.
The leaders also agreed to ease payment terms for European borrowers.
Traders said the anti-crisis measures were welcomed by financial markets worldwide, as these lifted the outlook of investors on how the global economy would perform over the short term.
The market players said efforts to address the crisis in the European region have been easing concerns of a slow global economic growth for 2012.
The EU is one of the biggest export markets for many emerging economies like the Philippines. It also serves as a key source of investments and as host to many migrant workers, including overseas Filipino workers, whose remittances boost consumption of recipient households.
The economic relations of Europe with many emerging economies like the Philippines are the reason its performance affects the outlook of investors on the emerging economies.
Traders said that reports about efforts to curb the eurozone crisis made investors more confident to purchase perceivably risky instruments, such as Asian stocks.
The improved sentiment for emerging economies thus pushed the Philippine Stock Market Index to 5,300.24, up by 53.83 points from Friday’s close.
Officials from the Bangko Sentral ng Pilipinas said demand for peso-denominated portfolio instruments would improve in the second half of the year as yield-seeking investors would likely go for assets from emerging markets, which have been growing at much faster rates than advanced economies.
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