Peso inches up after sliding into P43-to-dollar level

MANILA, Philippines—The peso fell into the 43-to-a-dollar territory during intraday trade amid negative sentiments arising from the cut in China’s growth forecast and the uncertainties surrounding the Greek debt swap deal, but recovered and closed stronger at the end of trading.

After hitting an intraday low of 43.08 against the US dollar, the peso closed at its intraday high of 42.87:$1, up by 7 centavos from the previous day’s finish of 42.94:$1.

Volume of trade amounted to $973.31 million from $1.09 billion previously.

Traders said the intraday movement of the peso reflected the movements of other major Asian currencies, which were dragged by reports that China has cut its growth projection for the year from 8 to 7.5 percent. The cut elicited concerns that other Asia-Pacific economies might grow slower than expected this year, they said.

Market players also said uncertainties over the ability of Greek government to convince sufficient number of bondholders to agree to the debt swap offer also dampened risk appetite of fund owners. Consequently, some fund owners pulled out investments in securities from emerging markets like the Philippines.

Under the debt swap offer, holders of Greek government bonds maturing soon are asked to forego close to 50 percent of their supposed earnings to help ensure the sovereign does not default on its loans and save the country and the eurozone from a much worse crisis situation. In return, the bond holders shall be given bonds that will have longer maturity.

The peso eventually recovered later in the trading day as knee-jerk reactions over China’s growth prospects and Greece’s debt situation simmered, and as some fund owners seeking for yields placed bets on peso-denominated instruments, traders said.