Peso falls back to 43-to-dollar level as jitters over Euro debt resurface
MANILA, Philippines – The peso followed other Asian currencies in declining on Tuesday and weakened back to the 43-to-a-dollar territory after renewed jitters over the debt situation in Europe.
Traders said warnings by credit rating firms Standard & Poor’s and Moody’s Investors Services over the potential inability of banks in Italy to service their obligations have prompted some investors to dump emerging market assets.
The local currency closed at its intraday low of 43.23 against the US dollar, down by 32 centavos from the previous day’s finish of 42.91:$1.
Intraday high hit 43:$1, while volume of trade rose to $1.13 billion from only $646.08 million the previous day.
Traders said the uncertainty created by the financial-sector problems in Italy has made investors rethink about pouring money in portfolio assets from emerging economies and stay in US dollars for “safety.”
Investors’ fears were recently allayed over the debt situation in Greece after it passed an austerity measure and appeared to likely get another rescue package from the European Union and the International Monetary Fund, traders said.
But investors now realize that the debt woes in the Euro zone are far from over.
