Peso down as fiscal problems of US, Europe cast shadow on global outlook

MANILA, Philippines—The peso inched down on Tuesday together with other major Asian currencies amid jitters caused by fiscal problems in the United States and Europe.

Traders said the worrisome fiscal situations of governments in the West elicited doubts on the ability of the global economy to grow as earlier expected. Western economies serve as export markets for many developing countries like the Philippines.

The peso closed at 43.33 against the US dollar on Tuesday, down by 7.5 centavos from the previous day’s finish of 43.255:$1.

Intraday high hit 43.29:$1, while intraday low settled at 43.47:$1. Volume of trade amounted to $960.2 million from $662.54 million previously.

The US government was assigned a negative outlook on its triple A credit rating by Standard & Poor’s. A negative outlook indicates probability of a downgrade in credit rating over the short term.

The negative outlook was anchored on doubts over the US government’s ability to meet its obligations in the future due to ongoing debates in the US Congress on whether to raise the US debt ceiling or not. If the ceiling is not raised, the US may not be able to borrow more and might not have enough resources to pay all its obligations.