Thu, May 29, 2008 - Page 11 News List

NT dollar reverses three-day decline on exporter purchases

BLOOMBERG

The Taiwanese currency gained on speculation that exporters converted overseas profits to the New Taiwan dollar for month-end bookkeeping, snapping three days of declines after it touched the lowest in a week.

“Exporters are selling the US dollar as the month-end approaches,” said Yang Kung-yi (楊恭逸), a currency trader at Shanghai Commercial & Savings Bank (上海商業儲蓄銀行). “They have to meet their regular demand for the Taiwan dollar.”

The local currency rose NT$0.028 to close at NT$30.512 against the US dollar, according to Taipei Forex Inc.

The NT dollar, South Korea’s won, the Philippine peso, the Israeli shekel and the Chilean peso were among those that are most vulnerable to “the current oil shock,” Jens Nordvig, a New York-based strategist at Goldman Sachs Group Inc, wrote in a research note on Tuesday.

South Korea’s won is the biggest loser from record crude oil prices, ranking last among 23 currencies showing sensitivity to fuel costs, according to Goldman Sachs.

The won fell more than 10 percent this year against the US dollar, the worst performance among 16 most-active major currencies, as crude oil futures in New York reached an all-time high of US$135.09 on May 22 after more than doubling in the past year.

“Countries with large energy imports relative to gross domestic product are likely to see currency depreciation pressure as a result of higher oil prices,” Nordvig said.

“There is a cluster of Asian currencies at the bottom of this ranking,” he said.

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