The New Taiwan dollar dropped nearly three-quarters of a percent against the greenback yesterday after the central bank showed its determination to prevent speculative attacks on the local currency, dealers said.
Declining for a second consecutive day after hitting a more than 10-year intraday high on Wednesday, the NT dollar closed NT$0.222 lower at NT$30.402 versus the US dollar on the Taipei Forex Inc. Turnover was US$1.845 billion, down from US$2.001 billion in the previous session.
Yesterday's 0.74-percent drop on the value of the NT dollar was the biggest since June 8, 2006, the foreign exchange's tallies showed.
To curb currency speculation, the central bank announced on Thursday that it would lower the reserve requirement ratio for foreign currency deposits to 0.125 percent, from 5 percent, effective on Tuesday.
At a press briefing following its quarterly board meeting on Thursday, the central bank warned of punitive measures against foreign funds that speculate on the local currency's rise.
``The market, of course, has heeded the central bank's latest message,'' a local currency trader, who requested anonymity, said by telephone yesterday.
"In addition to central bank intervention and US dollar purchases by insurance companies, there was some short-covering of US dollar non-deliverable forward contracts and repatriation of profits by foreign investors, which all helped drive the NT dollar lower," the dealer said.
Foreign institutional investors sold a net NT$9.11 billion in local shares yesterday. For the week, they purchased a net NT$43.09 billion, Taiwan Stock Exchange data showed, on speculation that president-elect Ma Ying-jeou (
Despite the recent pullback, the NT dollar will likely continue to appreciate in the long term thanks to the subprime mortgage crisis in the US and foreign capital inflows in anticipation of improved cross-strait relations, the dealer said.
But the local currency's appreciation pace may slow, judging from the close of offshore NT dollar/US dollar non-deliverable forward trading contracts yesterday, as the one-month discount narrowed to NT$0.090 from NT$0.180 in the previous session.
"Next week, the NT dollar is likely to trade between NT$30.0 and NT$30.5," he said.
Another local bank dealer, however, said the nation's economic fundamentals were not in good shape despite optimism after the election. Therefore, he sees no point to be that bullish on the NT dollar like other foreign currency traders.
"The market needs to pay extra attention on the hawkish stance adopted by central bank Governor Perng Fai-nan (
"Perng has been at his post for almost a decade and he is known for his tight grip on the foreign exchange rate," th dealer said.
So far this year, the NT dollar has gained 6.3 percent against the greenback. In comparison, the central bank has only allowed the local currency to appreciate by 6.68 percent in the last two years as it must take into account the competitiveness of Taiwanese exporters.
The central bank has been under exporters' pressure as the recent NT dollar appreciation has raised concerns about the forex losses of local high-tech companies when these firms release their first-quarter financial reports beginning next week, the dealer said.
Shares of contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) came under pressure yesterday after a report that Apple Inc is looking to shift some orders from the Taiwanese company to Intel Corp. TSMC shares fell NT$55, or 2.4 percent, to close at NT$2,235 on the local main board, Taiwan Stock Exchange data showed. Despite the losses, TSMC is expected to continue to benefit from sound fundamentals, as it maintains a lead over its peers in high-end process development, analysts said. “The selling was a knee-jerk reaction to an Intel-Apple report over the weekend,” Mega International Investment Services Corp (兆豐國際投顧) analyst Alex Huang
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is expected to remain Apple Inc’s primary chip manufacturing partner despite reports that Apple could shift some orders to Intel Corp, industry experts said yesterday. The comments came after The Wall Street Journal reported on Friday that Apple and Intel had reached a preliminary agreement following more than a year of negotiations for Intel to manufacture some chips for Apple devices. Taiwan Institute of Economic Research (台灣經濟研究院) economist Arisa Liu (劉佩真) said TSMC’s advanced packaging technologies, including integrated fan-out and chip-on-wafer-on-substrate, remain critical to the performance of Apple’s A-series and M-series chips. She said Intel and Samsung
TRANSITION: With the closure, the company would reorganize its Taiwanese unit to a sales and service-focused model, Bridgestone said Bridgestone Corp yesterday announced it would cease manufacturing operations at its tire plant in Hsinchu County’s Hukou Township (湖口), affecting more than 500 workers. Bridgestone Taiwan Co (台灣普利司通) said in a statement that the decision was based on the Tokyo-based tire maker’s adjustments to its global operational strategy and long-term market development considerations. The Taiwanese unit would be reorganized as part of the closure, effective yesterday, and all related production activities would be concluded, the statement said. Under the plan, Bridgestone would continue to deepen its presence in the Taiwanese market, while transitioning to a sales and service-focused business model, it added. The Hsinchu
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has approved a capital budget of US$31.28 billion for production expansion to meet long-term development needs during the artificial intelligence (AI) boom. The company’s board meeting yesterday approved the capital appropriation plan for purposes such as the installation of advanced technology capacity and fab construction, the world’s largest contract chipmaker said in a statement. At an earnings conference last month, TSMC forecast that its capital expenditure for this year would be at the higher end of the US$52 billion to US$56 billion range it forecast in January in response to robust demand for 5G, AI and
RSS