MANILA, Philippines—The peso’s value went down on the first trading day of the week amid renewed market concerns on the debt situation of the Euro zone.
The local currency closed at 43.60 against the US dollar on Monday, down by 18 centavos from Friday’s finish of 43.42:$1.
Intraday high hit 43.51:$1, while intraday low reached 43.62:$1. Volume of trade amounted to $679.787 million, down from $838.05 million previously.
Traders said the peso’s depreciation on Monday was consistent with the decline of other major Asian currencies. Traders said the debt crisis in Europe again caused a general risk aversion for portfolio securities from emerging markets, even those in Asia.
They said investors got worried again about the fiscal condition of the Euro zone following the release of a warning that the credit ratings of several Italian banks might be downgraded due to financial problems.
Given the importance of the banking sector on any economy, any negative performance of big banks is seen to force a government to consider a bailout. Bailouts, in turn, drag a government’s own fiscal situation.
Reports last week said Moody’s Investors Service had assigned a “negative” outlook on 13 Italian banks. A “negative” outlook indicates the possibility of a credit-rating downgrade within the short term.
The problem faced by the banking sector of Italy adds to the problems faced by the European Union, which recently unveiled a plan to give Greece another multibillion-euro package to prevent the country from defaulting on its liabilities.