Sun, Mar 14, 2004 - Page 11 News List

Election swings NT dollar

FLUCTUATION EXPECTED The March 20 presidential election, as well as outside factors like the international security situation, is expected to influence the currency

CNA , TAIPEI

The New Taiwan dollar is likely to experience further fluctuations in the run-up to the March 20 presidential election due to various key elements both at home and abroad, sources from the banking industry said yesterday.

Depreciate

Pointing to the impeachment of South Korean President Roh Moo-hyun and the recent terrorist bomb attacks in Spain as key factors that led the local currency to depreciate and the stock market to plunge over the weekend, the sources said a large amount of foreign capital remitted out of the country will cause the situation to further deteriorate.

The weighted index -- the key barometer of the domestic stock market -- ended at 6,800.24 points on Friday, down by 78.87 points from the previous day's finish. A total of NT$19.616 billion (about US$5.86 billion) worth of Taiwan shares were sold by foreign investors, representing an all-time single-day high.

Psychological effect

On the same day, the New Taiwan dollar dropped by NT$0.085 in value against the US dollar to close at 33.472 on the Taipei foreign exchange market, as a result of the psychological effect of a 1 percent plunge in the won in the wake of Roh's impeachment.

However, market dealers said that they do not expect to see a dramatic plummet of the local currency in the near term, on the grounds that last Friday's transactions totaled a moderate level of US$1.144 billion.

Foreign capital

Although the Central Bank of China would prefer to see a weaker New Taiwan dollar, market dealers said the local currency is not expected to largely depreciate prior to the presidential poll next week, despite the fact that foreign capital might continue to be remitted out of Taiwan.

An outflow of foreign capital is unlikely to have a major impact on the domestic monetary market, as the overall situation in Asian financial markets is now much improved, sources said.

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