Peso falls amid persistent eurozone debt crisis

MANILA, Philippines—The peso fell in the second trading day of the week amid outlook that the debt crisis in the eurozone will persist, if not even worsen, next year and drag growth of the global economy.

The local currency closed at 43.46 against the US dollar on Tuesday, down by 19 centavos from Monday’s finish of 43.27:$1.

Intraday high hit 43.30:$1, while intraday low settled at 43.46:$1. Volume of trade amounted to $994.72 million from $798 million previously.

The decline in the peso, which led the drop of other major Asian currencies against the greenback, came following announcement by Standard & Poor’s that several countries in the eurozone are facing a possible downgrade of their credit ratings in 2012 due to the lingering debt crisis in the Western region.

The depreciation of the peso also came following the release of a report from the Asian Development Bank citing the probability of the eurozone debt crisis worsening and dampening economic performance even of emerging markets like the Philippines.

The eurozone is one of the biggest export markets, and so a prolonged crisis in that region could cause further declines in export earnings of the Philippines and other exporting countries.

A prolonged crisis in the eurozone is also expected to cause interest rates in the international capital market to rise, thereby increasing expenses and trimming profitability of enterprises.