The New Taiwan dollar weakened for a second day in three as crude oil prices rose, prompting speculation of demand for the US currency from oil companies.
Refiners Chinese Petroleum Corp (
"Importers jumped in to buy the US dollar today," said Pory Shih, a trader at Chang Hwa Commercial Bank (
The NT dollar declined NT$0.025 to close at NT$31.942 against the US dollar, according to Taipei Forex Inc. Turnover was US$660 million, down from US$782 million the previous day.
The local currency may weaken beyond NT$32 next week, Shih said.
Crude oil for August delivery rose as much 1.5 percent to US$58.65 a barrel in after-hours electronic trading on the New York Mercantile Exchange.
Overseas inflows offered certain support to the local currency as foreign institutional investors bought a net NT$5.66 billion (US$177 million) worth of Taiwan's stocks yesterday, according to Taiwan Stock Exchange's statistics.
Dealers said a scheduled semi-annual testimony on the US economy by Federal Reserve Chairman Alan Greenspan next Wednesday may provide more hints on the movement of US dollar and how it would impact on NT dollar.
The NT dollar may have room to fall, helping to support the island's exports in the second half, Hsu Kuo-chung (
Exports, which equal about half of Taiwan's gross domestic product, grew in June at the slowest pace in two years on high oil costs, the ministry said last month.
Allowing for distortions caused by the Lunar New Year holiday, that would be the smallest gain since May 2003.
Shipments increased 3.1 percent from a year earlier to US$14.9 billion in June, resulting in a trade deficit of US$119.5 million.
For the January-June period, Taiwan had a trade surplus of US$425.2 million, 89 percent narrower than a year earlier.
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