Fri, Feb 09, 2007 - Page 11 News List

NT dollar weakest in three months

STAFF WRITER , WITH AGENCIES

The New Taiwan dollar yesterday penetrated the key NT$33 level and dropped to the lowest rate in three months against its US counterpart after a report showed the nation's trade surplus had narrowed, traders said.

The nation's trade surplus shrank to US$1.89 billion last month from US$2.90 billion the previous month as imports surged, the Ministry of Finance reported on Wednesday.

US dollar purchases in the non-deliverable forwards market and buying of overseas securities by Taiwanese investors, especially insurers, also pushed the local currency lower, traders said.

A weakened yen ahead of the Group of Seven meeting in Germany today and tomorrow dragged the NT dollar lower as well, they added.

On the Taipei Forex Inc, the NT dollar declined NT$0.015 to close at NT$33.010 against the US currency, the lowest close since Nov. 2.

The local currency had earlier softened to as low as NT$33.063 against the greenback in the morning session, marking a new intraday low since Nov. 2.

Turnover declined slightly to US$1.194 billion from US$1.213 billion the previous day, according to the exchange.

"The outflows out of Taiwan are very large and that's a negative for the currency," said Sean Callow, a currency strategist at Westpac Banking Corp in Singapore.

"It's an awful story in Taiwan fundamentally as Taiwanese are sending all their money abroad," he said.

Dealers said foreign fund managers provided little indication of the future direction of the NT dollar during the session, as they had seen both foreign fund outflows and inflows during the day.

According to the Taiwan Stock Exchange Corp's tallies, foreign funds bought a net NT$354.8 million (US$10.75 million) worth of Taiwanese stocks yesterday. They bought a net of NT$8.8 billion on Wednesday.

Other Asian currencies also slid on the yen's decline.

"The yen pushing lower has been a catalyst for Asian currencies to weaken," Callow said.

"There's a weight of money that's saying lets keep pushing the yen weaker and Asian currencies could follow in the short term," he said.

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