MANILA, Philippines—The peso, together with other Asian currencies, fell on the first trading day of the week amid investors’ fears that the debt problem of Greece could spill over to Germany’s banking sector.
The local currency closed at P42.815 against the US dollar, down by 32.5 centavos from Friday’s finish of 42.49:$1.
Intraday high hit 42.63:$1, and intraday low settled at 42.82:$1. Volume of trade rose to $921.7 million from $752.81 million previously.
Traders’ reports that some banks in Germany may be preparing for a default by Greece caused jitters among portfolio investors, who decided to pull out funds from emerging markets like the Philippines.
Some German banks were found to hold Greek bonds, and so they are believed to be exposed to the debt woes of Greece. As a result, these banks also face the threat of credit-rating downgrades.
Traders said a spillover of the Greek debt woes to the German banking sector would show the continuing crisis in the Euro area. Consequently, the global economy’s much faster recovery from the latest turmoil is also doubted.
In times of uncertainty, traders say, portfolio investors opt to stay liquid by withdrawing funds from perceivably risky assets, such as those issued from developing countries, and by holding on to dollars.