Peso falls on news Japan’s economy may have shrunk

FILE PHOTO

MANILA, Philippines—The peso fell on the first trading day of the week as the projection that the Japanese economy might have shrunk in the latest fiscal year dampened appetite for emerging-market assets.

The local currency closed at 42.315 against the US dollar, down by 15 centavos from Friday’s finish of 42.165:$1.

Intraday high hit 42.26:$1, while intraday low settled at 42.335:$1. Volume of trade reached $706.7 million from $747.05 million previously.

The depreciation of the peso and other key currencies in the Asia-Pacific came following the move of the central bank of Japan to revise its forecasts for the Japanese economy. The Bank of Japan now sees the economy contracting by 0.3 percent for the fiscal year ending March 2012 from the previous forecast of a 0.4-percent growth.

Moreover, it now sees the Japanese economy growing by 2 percent in the fiscal year ending March 2013 from the previous projection of 2.2 percent.

Japan is one of the key export markets for the Philippines and other emerging markets in the region.

Traders said the depreciation of the peso and other emerging-market currencies in the region came amid speculation that economic problems in Japan might dampen export earnings and, thus, the overall growth, of exporting countries.

Market players also said the decline of the peso and other key Asian currencies came as investors were waiting at the sidelines for what the US Federal Reserve would do with the US economy. Investors have been waiting to see whether or not the US Fed would inject more funds to the world’s biggest economy as its growth has been sluggish, they added.