MANILA - The peso is expected to face further downward pressure this week as sentiment is likely to remain volatile, while investors continue to assess the possibility of another global systemic crisis arising from the debt problems in Dubai, traders and analysts said.

Economic data releases in the US this week may “exacerbate” the negative sentiment prevailing since last week, they said. Disappointment also lingers after the Philippines announced a weaker-than-expected economic growth in the third quarter on Thursday.

The local unit could retest the P47.50-per-dollar level after falling 0.2% to P47.205 on Friday from the previous week, said Banco de Oro Unibank chief market strategist Jonathan Ravelas.

Risk aversion resurfaced in global markets on Friday, reversing the peso’s upward trend seen during the early part of the week, following the Dubai government’s move to seek a six-month delay for debt repayments by Dubai World, a government investment company, and its subsidiary Nakheel, a property-development company.

The peso, however, remained in the winning column on the last trading day of November with a gain of 0.7% so far this year, trading firmer than its end-2008 level of 47.52.

Philippine financial markets were closed on Monday for Bonifacio Day. Trading on peso and local stocks resumes on Tuesday.

Traders said although the United Arab Emirates central bank on Sunday set up an emergency liquidity for commercial banks, calming the frayed nerves of investors, volatility in financial markets is expected to continue.

“[The] lack of details on Dubai’s debts could pose further risks to the financial markets, which will remain choppy until more clarity on Dubai’s real-estate developer Nakheel’s Islamic bond worth $3.5 billion, which is due to mature on December 14,” currency strategists at UOB Bank said in a note.

But while downside risks to Asian currencies remain, they said markets had been calmed by reassurances from European banks and governments worldwide on their manageable exposure to Dubai World.

HSBC and Standard Chartered Bank were reportedly among the global banks with the largest exposure to Dubai.

“Like markets after the September 11 [terror] attacks [on the US], sentiment is likely to remain volatile after UAE markets reopen this week. Markets will also be watching to see if Dubai World’s unit Jafza will default on a coupon payment on a AED7.5-billion Islamic bond [on Monday],” said currency strategist Philip Wee of DBS Bank.

Wee said markets were hoping there will be more information about the debt problems in Dubai.

The Dubai World crisis and the devaluation of the Vietnamese dong on November 25 had drawn attention to emerging market economies that are overleveraged, he said.

Economic data releases in the US this week may “exacerbate the prevailing negative market breadth,” Bank of the Philippine Islands (BPI) said in a weekly note.

“Weaker economic data releases in the US may reinforce demand for the relative safety of US government securities and may further spur the safe-haven appeal of the greenback,” BPI said.

However, it said the prospective appreciation of the dollar this week may be limited by the improvement in economic confidence in the Eurozone.

According to BPI, market analysts were forecasting the ISM manufacturing index to decline to 54.8 in November, from 55.7 in the previous month. Another report, it said, may show 0.8% drop in pending home sales in the US in October after being unchanged in September.

“Market cautiousness may also resurface as initial jobless claims in the US are projected to climb to 483,000 this week from 466,000 last week,” BPI said. “However, the bearish sentiment may be limited as sales of vehicles may continue to improve despite the end of the cash-for-clunkers program.”