The Philippine peso fell after the armed robbery of a Citigroup Inc bank in Manila added to investor concerns about security following an attempt to overthrow the government by mutineers last month.
The currency had its biggest drop in two weeks on Monday after a report cited the army's chief of staff as saying soldiers were recruited for another effort to topple President Gloria Arroyo's administration. The report was later denied.
Allegations of corruption against Arroyo's husband and a court censure of the central bank governor also fanned concern about political instability that pushed the peso to its fourth record-low close.
The robbery "is an incident that isn't helping the peso," said Jan Lambregts, Singapore-based head of Asia Pacific research in the treasury department of Rabobank Groep NV, the third-largest Dutch lender.
"It helps feed that feeling of things running a little out of control. There's still the danger of political instability, coup d'etat," he said.
The peso continued its slide in morning trade yesterday, plunging to as low as 55.60 to the dollar.
On Monday, it closed at a new 31-month low of 55.42 to the greenback.
Currency traders warned the peso could hit within a few days its all-time low of 55.75 to the dollar, posted on Jan. 17, 2001 -- three days before former president Joseph Estrada was ousted by a military-backed mass uprising.
Armed robbers stormed Citigroup's main Philippine banking branch in Makati, the capital's financial district, on Monday.
Gunfire damaged a neighboring building. No one was injured, the lender's retail banking director Patrick Cheng said in a statement.
The military denied on Monday a report by the Philippine Daily Inquirer on Saturday quoting Armed Forces Chief of Staff General Narciso Abaya as saying soldiers are being recruited in Mindanao to mount another mutiny after a revolt on July 27 demanding the resignation of Arroyo failed.
The denial may fail to sooth investor concerns, Lambregts said.
"Investors don't know, and when they don't know, they'll sell the peso," he said.
Arroyo yesterday said the government was "doing its best to achieve normalcy" following a failed mutiny last month and urged the public to support economic reforms being implemented to boost productivity and stability.
"The unfortunate brew of destabilization and partisan politics has affected the performance of our peso," she said in a statement. "We have to shake off the distraction of day-to-day controversies and devote ourselves to the essential tasks of development and reforms."
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