Tue, Sep 20, 2005 - Page 10 News List

NT dollar hits lowest level in 10 months


The New Taiwan dollar had its lowest close in 10 months versus the US currency on speculation the central bank will sell it to maintain demand for exports after the yen dropped last week.

Exports make up almost half of Taiwan's economy and the yen's 3.8 percent drop against the Taiwan dollar in the past year makes it harder for companies such as Taiwan Semiconductor Manufacturing Co (台積電) to compete with Japan's NEC Electronics Corp.

"The central bank probably prefers the Taiwan dollar to weaken to boost the economy," said Benson Liu, a trader at the International Bank of Taipei (台北國際商業銀行).

Gains in the nation's currency aren't justified compared with its Asian peers, central bank Deputy Governor Liang Fa-chin (梁發進) said last week.

"Such a preference may be stronger after the yen fell," Liu said.

Taiwan's currency yesterday dropped 0.5 percent to close at NT$33.096 against its US counterpart on the Taipei foreign exchange market, its weakest close since Nov. 10 and biggest drop since Sept. 6, according to Taipei Forex Inc. The currency may weaken to NT$33.40 this week, Liu said.

Overseas sales grew last month at the fastest pace in four months as the Taiwan dollar fell 2.4 percent, its largest decline since May 31, 2001. The yen strengthened 1.7 percent against the US dollar that month.

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