Peso falls over uncertainties in Greece debt swap deal

MANILA, Philippines—The peso fell on Tuesday amid uncertainties over whether the debt-swap deal offered by Greece to its bondholders would succeed.

Such a deal is necessary for the debt-ridden European country to get a bailout fund and avoid defaulting on its maturing obligations.

The peso closed at 42.94 against the US dollar, down by 4 centavos from the previous day’s finish of 42.90:$.

Intraday high hit 42.80:$1, while intraday low settled at 42.975:$1. Volume of trade amounted to $1.09 billion from $1.058 billion previously.

Traders said investors were wary about the ability of Greece to successfully complete the debt swap deal to avoid defaults.

Under the debt swap deal, which Greece must complete this week, the Greek government is convincing holders of Greek bonds to give up close to half of their supposed earnings in exchange for new bonds to be issued by Greece and by the EU’s European Financial Stability Facility. Greece must convince bondholders to give up earnings equivalent to 53.5 percent of the maturities.

The completion of the debt swap deal is another requirement for Greece to get the $170-billion bailout package earlier made available by the European Union. Prior to this requirement, Greece was also required to pass austerity measures.

Traders said uncertainties over whether the debt swap deal would be a success or not have caused some investors to be risk-averse and thus shy away from perceivably risky investment instruments, such as securities issued from emerging markets like the Philippines.

Consequently, traders said, currencies of emerging Asian markets like the peso fell.