The New Taiwan dollar had its weakest close in almost six months on speculation record crude oil prices will slow economic growth.
The currency also fell on concern companies such as state-run Chinese Petroleum Corp (中油) and Formosa Petrochemical Corp (台塑石化), the nation's only publicly traded oil refiner, will increase US dollar purchases to buy crude abroad. Other Asian currencies including the South Korean won and the Thai baht dropped because of rising fuel costs.
"The impact from the rising oil prices on the Taiwan dollar looks quite large," said Sadaaki Kondou, assistant general manager of the treasury department in Taipei at Mizuho Corporate Bank Ltd, a unit of Japan's biggest lender. "Dollar demand will increase, and people may start to concern about the economic outlook."
The New Taiwan dollar fell 0.4 percent to NT$32.070 against its US counterpart, the lowest close since Jan. 11, on the Taipei foreign exchange market. The currency may decline to about NT$32.25 this week, Kondou said.
The government's Directorate General of Budget, Accounting and Statistics on May 19 lowered its economic growth projection for this year to 3.6 percent from 4.2 percent.
Lehman Brothers Holdings Inc said in a report on June 27 that it cut its growth forecast for this year for Taiwan to 3.2 percent from 4 percent, citing the oil prices.
The US dollar rose to a fresh 11-month high against the Japanese yen in Asian trading yesterday on concerns that record crude oil prices could curb growth in Japan's resource-poor economy.
Japan and other Asian nations, which are heavily dependent on imported crude, are seen as particularly vulnerable to swings in oil prices.
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