Tue, Oct 03, 2006 - Page 12 News List

NT dollar tumbles to annual low

GOING SOUTH The uncertain political situation was blamed for the local currency falling to its lowest level against the greenback this year, a plunge which may continue

By Jackie Lin  /  STAFF REPORTER , WITH BLOOMBERG

Affected by a strong US dollar and the unstable domestic political situation, the nation's currency yesterday fell for the fifth day in succession, weakening to its lowest level this year during the morning session.

The NT dollar declined NT$0.029 to close at NT$33.127 against the greenback on the Taipei Foreign Exchange market yesterday. It slumped to 33.168 to the US dollar, the lowest this year, at 11:45am.

Turnover was US$1.266 billion.

"Political concerns were the major reason leading to the NT dollar's drop as foreign investors are sensitive," said Ivy Lee (李恆思), senior trader at The Shanghai Commercial & Savings Bank (上海商銀), during a phone interview.

Supporters of the anti-President Chen Shui-bian (陳水扁) campaign are currently touring the nation before heading back to the capital by Double Ten Day to launch a "Besiege the Presidential Office" protest.

The US dollar continued to strengthen on the international markets although several economic figures released by the US government last week were less favorable, Lee said.

Although the US Federal Reserve is widely expected to keep benchmark interest rates unchanged for the rest of the year, its rate spreads with other nations remain and have become an incentive to drive US dollar transactions, she added.

Asian currencies including the Japanese yen and Korean won slid yesterday. The yen dropped to as low as 118.39 against the US dollar before pulling back to 118.2.

Another analyst said Taiwan's dollar fell on concern that a slowdown in the US would curtail global growth, hurting the export-driven Asian economy. Manufacturing in the US expanded last month at the slowest pace in a year.

"Slowing world growth would not be good for the Taiwan dollar,'' said David Mann, a foreign-exchange strategist at Standard Chartered Bank Plc in Hong Kong.

Looking ahead, Lee said it would be hard to predict the NT dollar's fluctuations as it just broke the NT$33 threshold to close at 33.098 last Friday.

However, she predicted that the currency would maintain its weakening trend.

Some market watchers even forecast that there was a high probability that the NT dollar might drop to NT$33.5 against the greenback this week.

In a press statement issued yesterday, the central bank said total net trading volume in the Taipei foreign exchange market in August -- after eliminating double counting arising from interbank transactions -- amounted to US$343.8 billion, with an average daily turnover of US$15 billion.

The trading activity in the Taipei foreign exchange market covers all foreign exchange transactions made by authorized foreign exchange banks and offshore banking units, it said.

The NT dollar against foreign currency trading accounted for 36.5 percent of total trading volume, of which the share of NTD/USD trades was 34.1 percent, the bank said.

This story has been viewed 2580 times.
TOP top