Peso freefall due to Abu hostage crisis, says GMA

President Arroyo admitted yesterday that the continuing weakness of the peso against the dollar has been, to some extent, due to the effects of the three-week old Abu Sayyaf hostage crisis in Basilan.

At the Philippine Dealing System (PDS), the peso continued to suffer heavily, plunging to an intra-day low of 52.380 before settling at 52.320, or 34.50 centavos lower than Monday’s close of 51.975 to the dollar.

Trading was thin with a volume turnover of only $109.5 million compared to the previous day’s $141.5 million.

The President said she believed the kidnapping problem in the south was a "contributory factor" to the peso’s weakness.

"That’s why we are addressing the problem with great determination," she said, adding that "the other part of the problem is regional, so that is something that is really shared by the rest of the international community.

She expressed confidence that the peso will stabilize as soon as the market reacts favorably to her administration’s determination to succeed in resolving the hostage crisis.