Peso dips as global economy clouds growth of PH, emerging markets

AFP FILE PHOTO

MANILA, Philippines—The peso depreciated slightly on Thursday, amid concerns global economic problems might weigh down on growth prospects for emerging markets like the Philippines.

The local currency closed at 42.29 against the US dollar, down by 2 centavos from the previous day’s finish of 42.27:$1.

Intraday high hit 42.23:$1, while intraday low settled at 42.43:$1. Volume of trade amounted to $750.89 million from $1.05 billion previously.

The depreciation of the peso came following the slowdown of major economies, especially China and the eurozone, in the second quarter.

Traders said that although the Philippines would likely remain stable even amid uncertainties in the global economy, unfavorable external developments would be weighing down on domestic incomes.

Remittances to the Philippines hit the highest monthly figure of $1.8 billion in June, aided by sustained global demand for Filipino workers. This was up by 4 percent from $1.7 billion in the same month in 2011.

Despite the significant remittances in June, traders said the year-on-year growth marked a slowdown from the over 5 percent registered in the previous months of the year.

Traders said the slowdown in remittance growth might be an indication that global economic problems have started to impact on the Philippines.

Remittances help fuel spending of at least 10 percent of households in the Philippines.

China reported a 7.6-percent annual growth in its gross domestic product in the second quarter, slower than the 8.1 percent in the first quarter.

The eurozone contracted by 0.4 percent in the second quarter, raising doubts on the ability of the global economy to post faster recovery this year.

China and the eurozone are key export markets for goods from the Philippines and other emerging markets.