Peso falls on reports of exports drop, slow economic growth in 2011

MANILA, Philippines—The peso fell on Tuesday amid concerns the domestic economy might grow slower than expected this year due to the sluggish performance of the export sector.

The local currency closed at 43.47 against the US dollar on Tuesday, down by 11 centavos from 43.36:$1 on Monday.

Intraday high hit 43.17:$1, while intraday low settled at 43.47:$1. Volume of trade amounted to $1.085 billion from $931.65 million previously.

The depreciation of the peso came following the release of a report showing that the country’s exports fell by 15.1 percent year on year in August to $4.05 billion. The contraction in August accelerated from the 1.7 percent registered in July.

Traders said the drop in exports dampened outlook of portfolio fund owners on the Philippine economy. This is the reason the peso dropped on Tuesday, even if other major Asian currencies appreciated during the day as a result of efforts by European leaders to stem the Euro zone debt crisis.

Traders said the drag in investor sentiment for the peso caused by the contraction in Philippine exports outweighed the positive impact on risk appetite by reports that European leaders have been trying to have firmer solutions to the eurozone debt crisis.

Exports dropped 15.1 percent in August to $4.05 billion, much faster than the 1.7-percent contraction in July. This is the worst contraction since October 2009. In September 2009, the drop was at 18.1 percent.