Peso, Asian currencies fall over fears of slowing economies due to Japan crisis

Philippine Daily Inquirer

MANILA, Philippines—The peso fell together with other Asian currencies against the US dollar on Wednesday as concerns grew that the disaster in Japan and its nuclear crisis could dampen performance of economies of neighboring countries of the world.

The local currency closed at 43.22 against the greenback, down further by 4 centavos from the finish of 43.18 the previous day. The peso and other major Asian currencies have been depreciating since the start of the week amid concerns over the economic impact of the disaster in Japan.

Japanese authorities have admitted the significant nuclear risk at the Fukushima Dai-Ichi power plant, which was crippled by the killer quake and tsunami that struck the world’s third-largest economy last month.

Intraday high stood at 43.20:$1, while intraday low settled at 43.36:$1. Volume of trade amounted to $1.009 billion, down from $1.045 billion previously.

Traders said investors could not just shrug off the potential ill-effects of the Japan disaster on neighboring economies given the country’s significant economic role.

In the case of the Philippines, Japan serves as one of its biggest export markets and is the biggest source of cheap, developmental loans. Japan is also home to many overseas Filipino workers, whose remittances help fuel domestic consumption. Remittances from Filipinos based in Japan account for about 5 percent of total remittances sent to the Philippines.

A slowdown of developing economies like the Philippines and its neighbors, in turn, is seen to drag the global economy. This is because developing countries are the ones expected to lead growth of the global economy, as industrialized countries are still in recovery mode following their recession in 2009.

Traders said that in times of uncertainty, investors would shift their funds to perceivably less risky instruments, largely those denominated in US dollars. Consequently, investments are pulled out from developing countries like the Philippines, thus dampening their currencies.