Peso goes flat as investors worry over US debt

MANILA, Philippines—The peso moved sideways on the first trading day of the week as investors became a bit concerned that the US Congress had not agreed to extend the US debt ceiling despite the approach of the August 2 deadline.

The local currency closed at 42.39 against the US dollar on Monday, up by one centavo from Friday’s finish of 42.40:$1.

Intraday high hit 42.36:$1, while intraday low settled at 42.48:$1. Volume of trade amounted to $727.24 million, down from $1.038 billion previously.

The sideways movement of the peso reflected similar moves of other major Asian currencies, which were also being affected by the sentiment of investors resulting from the US debt problem.

The US Congress is being pressured to pass a bill extending the US debt ceiling before August 2. If it fails to do so, the US government, which has enjoyed triple-A credit ratings, may default on some of its maturing loans.

Traders said concerns over US debts have been somewhat dampening risk appetite of investors, thereby tempering growth in foreign capital inflows even to emerging economies like the Philippines.

Nonetheless, traders said, some investors were still betting on securities from emerging Asian markets like the Philippines because growth prospects of these economies have been much better than those of their Western counterparts.