The peso retreated to the 48-per-dolar level Friday as offshore investors dumped assets in Asian emerging markets after talks in Washington on a bailout of US carmakers collapsed at the US Senate.

The peso closed at the day?s low of 48.11 to the dollar after opening at the day?s high of 47.70, as dealers loaded up on dollars brought by gloomier prospects for General Motors, Ford and Chrysler.

The currency market was hardly bothered by a anti-administration protest rally that converged in the Makati business district late Friday, currency dealers said. They said it was the string of negative news in the United States that pulled back the peso from two-month highs.

?The rally was after trading and I think it won?t affect the peso unless protests spread or turn violent,? said Benedict Jose Arcinas, treasurer at Export and Industry Bank.

Aside from the stalled bailout package for US carmakers, stocks, currency and bond markets across the region were weighed down by the surge in US jobless claims and a record drop in import prices.

The region?s markets were taken aback by the flopped $14-billion car industry bailout talks and feared that the car companies may be driven into bankruptcy, said Marcelo Ayes, senior vice president at Rizal Commercial Banking Corp.

?This caused a rethinking of investments in high-yielding instruments and emerging markets,? Ayes said.

The peso dropped 0.33 from Thursday?s finish at 47.78 to the greenback. The volume of trading on the currency spot market surged to $1.04 billion from $747 million on Thursday, as investors shifted to the dollar in a knee-jerk reaction to the collapse of the US auto bailout talks.

Ayes said the peso could regain ground in the days ahead because of large foreign exchange remittances expected from overseas Filipinos in time for the Christmas holidays.

He said the peso might test 48.10-48.20 to the dollar and then end the year closer to 47.00. ?It may even hit 46.70,? he said.

Ramon Lim, treasurer at the Philippine National Bank, said there was thin demand for the dollar, which meant that the peso could recover in the following days.

He added that domestic political jitters could affect the financial markets only in the short term. ?We expect a lot of selling because of the long holidays,? he said.

Lim said the peso could end the year at 47.50 to the dollar, and next year trade in a range of 46.00 to 52.00 to the greenback.

Other Asian currencies tumbled yesterday after a week-long rally due to stalled talks at the US Senate. Edited by INQUIRER.net