Drop in equities pulls down peso

MANILA, Philippines - The peso lost another five centavos in Wednesday’s trading, following Wall Street’s huge drop Tuesday. The local currency closed at P47.55, down from P47.50 on Tuesday. "The weakness of the peso [along with other Asian currencies] was a market reaction to the fall of US equities especially the Dow Jones," a trader said. The Dow Jones industrial average on Tuesday night tumbled by 4.01% or 332.13 points to 7,949.09. The bellwether Philippine Stock Exchange index lost 3.04% or 57.81points to 1,840.12, as it tracked the Dow Jones. The peso opened weak at P47.60 Wednesday and posted an intraday low of P47.75, before moving to as high as P47.33. A trader explained that the movement was merely an indication of profit-taking among investors. "We are seeing risk-aversion in the market, a revival of what happened in October to November last year, following news of substantial losses and sharp declines of some US companies, the latest of which is the reported profit losses of institutional money manager State Street Corp. ," the trader added. Another trader said the inaugural speech of President Barack Obama also failed to persuade investors amid tensions of deepening global economic downturn. "The lack of concrete plans in combating the crisis caused investors to still seek risk-free assets [dollars in particular], rejecting Asian regional assets," he said. Traders expect the local currency to hit the P47.45 to P47.77 range today. Total volume of transacted dollars was brisker at $819.80 million from Tuesday’s $636.50 million. — Gloria Krisana L. Gallezo, BusinessWorld