The New Taiwan dollar fell the most in seven years as a government report today may show that the nation’s export orders dropped for a second month.
The local currency has retreated from a two-month high as orders fell 13.6 percent last year from a year earlier, a Bloomberg News survey said.
The currency rose 2.4 percent last week, the most in a decade. The central bank intervened to check its advance, the Chinese-language China Times said on Friday.
“Exports have been in a bad shape,” said Cindy Wang, a trader at Bank SinoPac (永豐銀行). “Gains in the local dollar are negative for competitiveness of exports.”
The NT dollar weakened 1.2 percent to close at NT$32.930 against its US counterpart, statistics from Taipei Forex Inc said. That was the biggest drop since May 28, 2001.
Another report today may show industrial production declined 15.7 percent last month from a year earlier, the biggest drop since September 2001.
“Asian forecasters have been overestimating growth in recent months,” said Sean Callow, a currency strategist with Westpac Banking Corp in Sydney. “I would say the market has not fully priced in the 2009 outlook.”
The central bank bought US dollars last week after exporters complained the local currency’s strength is hurting them, the report said, citing traders it didn’t identify. Central banks intervene in currency markets by arranging sales or purchases of foreign exchange.
Authorities signaled they weren’t alarmed by the decline. The NT dollar is “relatively stable,” the central bank in Taipei said yesterday.
South Korea’s won posted a bigger decline, the central bank’s statement said. The won dropped 1.3 percent.
The NT dollar, however, rose 2.4 percent last week — the most in a decade.
Taiwan and South Korea compete in the global semiconductor and flat panel display markets.
Meanwhile, Taiwan’s 10-year government bonds fell for a third day before the finance ministry’s auction of NT$40 billion (US$1.23 billion) of the debt today.
“Over the past week the market has reflected the negative sentiment toward tomorrow’s [today’s] bond sale,” said Ernest Lee, a debt trader at Mega Securities Co (兆豐證券), in Taipei. “The increasing amount of bonds is a bearish factor.”
The yield on the 2.125 percent bond maturing in September 2018 climbed 3.1 basis points to 1.441 percent, said GRETAI Securities Market. Its price fell 0.2876, or NT$287.6 per NT$100,000 face amount, to 106.1826. A basis point is 0.01 percentage point.