This is from Malaya. The financial crisis is being globalised. From the Philippines to Iceland. In fact Iceland seems to be much worse off than the Philippines! Although there has been some talk lately that the US dollar is losing status as a global currency it seems that it is being used as a refuge during this mess while other currencies decline!
Peso, stocks tumbleMarkets doubt US can head off slump
Share prices skidded 2.6 percent and the peso lost 39 centavos to the dollar at 47.43 yesterday in tandem with the regional market on doubts the $700M US bailout plan which was signed into law during the weekend could head off a global slump.
Traders and analysts traced the peso’s weakening to the continuing effects of the turmoil in the US and partly to the Bangko Sentral’s decision to keep interest rates unchanged, contrary to market expectations it would follow the general trend in Asia.
Bangko Sentral deputy governor Diwa Guinigundo said that the market slide was due to continuing "risk aversion."
He said that the financial market turmoil has taken its toll on capital flows to emerging markets, including the Philippines.
"That is one factor affecting the recent weakness in the peso exchange rate," Guinigundo said.
He said the peso’s slide would be halted when remittances from overseas workers started flowing strongly during the last quarter in preparation for the holidays.
"We expect that by the last quarter, we should see more flows coming from remittances, receipts from services and tourism," Guinigundo said.
Summit Securities president Harry Liu said there is opportunity for medium-term positioning given the oversold condition of stocks.
"Lead would come from speculation that something good would with the US election in November. The over-all undertone however remains cautious," said Liu.
The Philippine Stock Exchange index shed 66.68 points to close at 2,499.53.
Trading turnover reached 652.61 million shares worth P2.13 billion.
Most actively traded Philippine Long Distance Telephone Co. was down P20 to P2,670. Energy Development Corp. was down P0.05 to P3.95. Bank of the Philippine Islands was down P2.50 to P44. Ayala Corp. was down P17.50 to P270. First Gen Corp. was down P1 to P17.50. Alaska Milk Corp., was down P0.05 to P4.55.
The South Korean won and Indonesian rupiah led a sharp decline in Asian currencies, driven by tumbling stock markets, an acute shortage of dollars and broader growth concerns.
Markets in parts of Asia were closed on several days last week and that piled additional pressure on currencies, such as the rupiah, as emerging markets globally feel the impact of the global credit crisis.
The won fell nearly 5 percent to a 6-1/2-year low of 1,286.9 per dollar, before paring some of those losses on talk of intervention by the authorities.
In major markets, the euro fell to a 2-½ year low against the yen and the Aussie too plunged against the yen as any relief over the US government’s approval of a $700 billion bank bailout package proved fleeting and gave way to anxiety over the failure of European leaders to agree on a rescue plan.
The rupiah fell as far as 9,565 per dollar, its weakest in more than two years.
"The preference to hold dollars remains acute even in Asia," said Emmanuel Ng, a strategist at OCBC Bank.
"It doesn’t help that Asian central banks are also gradually looking at softening up on rate policy on the back of the global slowdown, with the PBOC, CBRC already the first ones to move," he said, referring to recent rate cuts in China and Taiwan.
Analysts said that besides the risk aversion and funding problems spurred by the crisis, the underlying concerns about economic growth, particularly the fear of recession, were weighing on market sentiment.
That fear is expected to sway policy in Asia, with the focus on monetary meetings in Indonesia, the Philippines, Korea, Singapore and Thailand this week.