Philippine Peso Falls on Concern Greece May Restructure Debt

The Philippine peso fell the most in more than a week after a European Union official warned that a possible debt restructuring in Greece may lead to another credit crisis, damping demand for emerging-market assets.

South Korea’s won led declines among Asia’s most-traded currencies as the MSCI Asia-Pacific Index of regional shares slumped 1.6 percent, the biggest loss in two months. “A debt restructuring in Greece would have major consequences on the soundness of the banking sector in Greece,” EU Economic and Monetary Affairs Commissioner Olli Rehn said yesterday.

“The worries are coming from Greece’s problems and it is now risks off,” said Roland Avante, a treasurer at Sterling Bank of Asia in Manila. “We may see the dollar strengthen as investors assess the risks.”

The peso dropped 0.5 percent to 43.105 per dollar as of the 4 p.m. close in Manila, its biggest loss since May 3, according to Tullett Prebon Plc.

“Such a major banking crisis would lead to a massive credit crunch,” Rehn said yesterday at the European Parliament in Strasbourg, France. “The contraction of the economy would be unprecedented in Greece.”

Philippine benchmark three-year bonds fell, ending two days of gains. The yield on the 6.25 percent note due January 2014 climbed five basis points, or 0.05 percentage point, to 4.875 percent, according to Tradition Financial Services.

To contact the reporter for this story: Karl Lester M. Yap in Manila at

To contact the editor responsible for this story: Sandy Hendry at

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