Flight to safe havens pulls down peso

MANILA, Philippines - The peso lost against the dollar for the third straight session Monday amid a deteriorating US labor market picture that aggravated anxiety over the health of the global economy. It closed at P47.525 per dollar, thirty-seven-and-a-half centavos weaker than its finish on Friday. Traders said over the weekend that a breach of the crucial P47.45-per dollar barrier would indicate a depreciating momentum for the local currency. The peso’s renewed weakness came after a December US payrolls report released last Friday showed more than half a million jobs lost and the highest unemployment rate since 1993, increasing chances the economic downturn would be the longest since the Great Depression. That worsened fears that Asia’s export-driven economies would be dragged into the fray, prompting a scamper for safe-haven assets. "Equity markets reacted to the bleak data. There were sell-offs. Asian currencies, including the peso, were hitting multi-week lows against the dollar," a trader said. The sell-offs in emerging markets meant outflows in stocks and portfolio investments hurting Asia’s domestic currencies, traders said. "With the outflows, the peso had nothing for support. There were heavy dollar buyers today that confirmed a breakout of the P47.45 per dollar level," a trader said. The peso opened weak at its intraday high of P47.30 per dollar and settled near its intraday trough of P47.53. It failed to get relief from the central bank, which was believed to have stepped in to sell dollars when the peso was being traded at P47.45 per dollar. Volume of transacted dollars ballooned to $1 billion from Friday’s $797.89 million. — Maria Eloisa I. Calderon