The New Taiwan dollar weakened yesterday to the lowest level in a decade on persistent speculation that overseas fund managers would sell more shares as part of a plan to withdraw resources from emerging markets to raise cash for parent companies.
The local currency weakened in nine consecutive trading sessions to NT$33.497 against the US dollar, recovering from NT$33.5 in mid-session. Turnover was US$899 million.
“Foreign investors play a crucial role in the movement of local currency,” a dealer with Shanghai Commercial and Saving Bank (上海商銀) said.
“They are extending recent sales of local shares and getting more cash to help fund their parent companies amid the weak financial situation,” he said.
Foreign investors unloaded NT$6.58 billion in shares yesterday after selling about NT$16.7 billion local stocks last week.
The TAIEX declined 4.65 percent, or 212.75, to 4366.87 points after the Financial Supervisory Commission resumed the 7 percent daily lower limit in trading. The limit had been halved to 3.5 percent for two weeks.
“As a recovery from the global economic meltdown is not in sight in the short term, the NT dollar could keep falling,” said another dealer, who requested not to be named.
The government cut its forecast for annual economic growth to 4.3 percent for this year from 4.78 percent. Orders received by local companies last month grew 2.82 percent to US$31.79 billion, the slowest growth since March 2002.
In addition, the central bank could reinforce the decline in the local currency to boost exports as the South Korean won has fallen sharply against the greenback, the anonymous dealer said.
“A weaker NT dollar will help lift the competitiveness of local exporters,” the dealer said.
Taiwan competes with South Korea to export products to the US and other areas.
The NT dollar may continue to fall this week to between NT$33.2 and NT$33.7 against the US dollar, the dealer said.
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