The New Taiwan dollar is likely to weaken to NT$31 against the greenback by the end of the year as overseas sales cool, HSBC Holdings PLC and ABN Amro Bank NV said.
Last month saw the local currency suffer its biggest monthly loss against the greenback since January last year, sliding 0.8 percent, as the government reported the slowest growth in export orders in a year and foreign investors sold more shares than they bought for a second straight month. The government predicts economic growth this year will be the slowest since 2005.
“Taiwan is still a very export-oriented economy and with export growth looking to slow down, it will start impacting [on] the Taiwan dollar,” said Perry Kojodjojo, a Hong Kong-based currency strategist at HSBC.
The NT dollar yesterday dropped another NT$0.02 for the fifth consecutive trading day, closing at NT$30.666 in Taipei. The benchmark TAIEX also slid for a third trading day, losing 0.4 percent.
Kojodjojo forecast that the NT dollar could weaken to NT$31 per US dollar by the end of the year.
The nation’s export growth could slow to 17.1 percent last month from 21.3 percent the previous month, based on the median estimate of economists surveyed by Bloomberg News. The government is scheduled to release trade figures on Thursday.
Export orders, indicative of shipments in one to three months, rose 9.3 percent from a year earlier in June after climbing 14.5 percent in May.
“The risk of an export slowdown in Taiwan has heightened,” Irene Cheung, a Singapore-based strategist at ABN Amro, wrote in a report last Wednesday.
She predicted the NT dollar would reach NT$31.5 to NT$32 per dollar by the end of this year.
Exports account for about half of Taiwan’s economy, which expanded 6.06 percent from a year earlier in the first quarter of this year after rising 6.5 percent in the previous three months, official figures show.
GDP is forecast to climb 4.78 percent this year, after increasing 5.72 percent last year, the statistics bureau forecast in May.
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