Peso falls anew over Euro debt contagion fears

MANILA, Philippines — The peso fell on the first trading day of the week amid concerns of a contagion of the debt crisis in the Euro zone.

The local currency closed at 43.87 against the US dollar, down by 29 centavos from Friday’s finish of 43.58:$1.

Intraday high reached 43.67:$1, while intraday low hit 43.89:$1. Volume of trade amounted to $883.20 million compared with the $964.84 million on Friday.

Traders said concerns that Greece would default on its liabilities and thus affect other Euro zone economies that have exposure to the debt-ridden country have dampened appetite of foreign portfolio investors.

Consequently, traders said, holders of securities issued even from better performing economies of developing countries in Asia were liquefying their assets. They said that in times of uncertainty in the global economy, fund owners would want to hold on to very liquid assets, mostly US treasuries, or simply to dollars.

Last Friday, traders said, the peso in fact touched 44:$1 during intraday trade and only closed at the stronger level of 43.58:$1 following intervention by the Bangko Sentral ng Pilipinas (BSP), particularly through selling of dollars.

They said the BSP could have also intervened on Monday, adding that the fall of the peso on the first trading day of the week could have been worse if not for the central bank’s action.

The BSP said it has been maintaining a policy of allowing a market-determined exchange rate, but would intervene in the market to avoid the sharp and sudden rise or fall of the peso. It said sharp volatility of the local currency would be disruptive to business and the general economy.