The New Taiwan dollar lost ground against its US counterpart yesterday for the eighth consecutive session, after the greenback gathered strength across the board as crude oil prices decline and amid rising concerns that Taiwan’s economy is slowing, traders said.
At the close in Taipei, the NT dollar dropped NT$0.132, or 0.43 percent, to NT$30.87 against the greenback — its lowest level since May 15, when the local currency traded at NT$30.88, data compiled by Taipei Forex Inc showed.
Turnover was US$1.185 billion on the Taipei Forex yesterday. Including turnover on the smaller Cosmos Foreign Exchange, total transactions reached US$1.722 billion in Taipei.
“The New Taiwan dollar’s recent weakness is mainly because of continued foreign capital outflows and the US dollar’s regained strength on the back of a fall in oil prices,” a local currency trader at Ta Chong Bank (大眾銀行), who wished to remain anonymous, said by telephone yesterday.
The NT dollar plunged by as much as NT$0.21 or 0.69 percent to NT$30.948 in mid-session yesterday, before the central bank intervened in the market, reining in some of the currency’s early losses, the trader said.
“Despite the central bank’s intervention, the short-term outlook for the NT dollar is rather bearish. The local unit is likely to test the important NT$31.0 level at any time,” he said.
Foreign institutional investors sold a net NT$333 million in local shares yesterday, helping to push the benchmark TAIEX 0.02 percent lower at 7,024.58. During the past eight sessions, foreign investors have offloaded a net NT$14.94 billion in local shares, Taiwan Stock Exchange data showed.
The local currency last finished under the NT$31 level when it traded at NT$31.102 on March 4. The NT dollar has risen 4.85 percent so far this year as the central bank allowed it to appreciate gradually to help curb imported inflation.
On Tuesday, the government’s statistics bureau said consumer prices climbed 5.92 percent year-on-year last month, the highest level since September 1994.
But another trader at Union Bank of Taiwan (聯邦銀行) said the central bank would be happy to see the NT dollar “turn weak a little bit” as monetary authorities were concerned about the nation’s economic growth momentum in the second half of the year.
“As the latest export figures showed the growth rate last month had decelerated to 8 percent from 21.3 percent in the previous month, it likely means the central bank has more reason to worry about economic growth rather than inflationary pressures,” said the trader, who also preferred to remain anonymous.
He suggested the currency would bottom out at NT$31.2 or so, because “the central bank, led by Governor Perng Fai-nan (彭淮南), typically doesn’t like the local unit to fluctuate too much.”
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