Peso slides back to P47:$1 territory

MANILA, Philippines - The peso Monday swung back to the P47-to-the-dollar territory, as the worsening turmoil in the US financial markets had investors scouring for safer assets such as the greenback. The local currency closed at P47.095 against the dollar, a twenty three-and-a-half centavo dive from Friday’s finish. Lehman Brothers Holdings’ announcement it would file for bankruptcy protection, signaling an end to its 158 years of existence, plus news of Merill Lynch & Co. being bought by the Bank of America Corp. and world’s largest insurer American International Group Inc. seeking liquidity assistance from the US Federal Reserve rocked financial markets, triggering another bout of risk aversion. "The peso was weaker due to concerns about Lehman. It’s all a Lehman story. The market is playing safe holding on to the dollar at the moment," a trader from a local bank said. "It’s another sell-off for the peso. People were getting out of emerging markets and going to quality. You can see the demand for the dollar, with non-deliverable forwards quoted with a premium of 48 centavos," another trader said. The peso opened at P46.75 and reached a high of P46.70 before settling at its intraday low of P47.095 against the dollar. It averaged at P46.979. Volume of dollars exchanged reached $608.64 million. Elsewhere, the dollar fell against other Asian currencies. The Thai baht and Singapore dollar rose Monday as the dollar fell broadly due to concerns about the US financial sector but falling regional stocks weighed on the Philippine peso and Indonesian rupiah. The US dollar tumbled against the euro and yen as Lehman Brothers said it would file for bankruptcy, heightening concerns over the US financial stability and sparking talk of a possible US rate cut. The Thai baht rose as far as 34.49 per dollar, up half of a percent. The Singapore dollar rose as far as 1.4275 per dollar, up almost half of a percent, while the Taiwan dollar firmed to 31.89 per US dollar. But worries about the health of the US financial system strained by the spreading credit market turmoil, hit regional stocks and put several local currencies under pressure. "I foresee flows getting into low risk/low reward asset classes from high risk/high reward asset classes," said Suresh Ramanathan, currency strategist at CIMB Investment Bank. "Asia ex-Japan currencies will not benefit much from latest dollar weakness given the above reason. Though the baht has made gains, its gains will be short-lived," he said. The Indonesian rupiah slipped to 9,457 per dollar. Meanwhile, the Indian rupee fell to 46 per dollar, its lowest in nearly two years. Markets in Japan, South Korea, China and Hong Kong are closed for holidays. - BusinessWorld