Peso weakens over fears of worsening Euro zone debt crisis

MANILA, Philippines — The peso weakened back to the 43-to-a-dollar territory on Thursday as concerns over a potential worsening of the crisis in the Euro zone prompted fund owners to liquefy their assets.

The local currency closed at 43.13 against the US dollar, down by 37 centavos from the previous day’s finish of 42.76:$1.

Intraday high hit 42.86:$1, while intraday low settled at 43.145:$1. Volume of trade amounted to $1.196 billion from $925.66 million previously.

Traders said investors became risk averse, thus withdrawing their investments in securities even those issued from emerging markets like the Philippines due to the uncertainty created by the unfavorable developments in the Euro zone.

European policymakers late last month unveiled a set of measures to manage the prolonged debt crisis in the Euro zone, and the measures were initially cheered by financial markets worldwide.

However, the announcement by the Greek prime minister that the debt-reduction measures proposed for Greece would be subjected to a referendum has sent concerns to foreign investors. This is because the debt-reduction measures for Greece, which would require the public to share in the burden, are seen to be unlikely to get the nod of voters.

Traders said that unless certainty of the resolution of the crisis in the Euro zone is achieved, financial markets would continue to be volatile as manifested by significant depreciation of emerging market currencies like the peso.