The New Taiwan dollar may fall against the US currency in the first six months of the year as the nation’s economy slumps, Barclays Capital said.
Falling interest rates around the world will also support the US dollar, said David Woo, global head of foreign-exchange strategy at Barclays Capital, the third-biggest currency trader. The NT dollar, little changed yesterday in Taipei at NT$33.265, has weakened 1.1 percent this year, after declining 1.3 percent last year.
“We’re looking for the currency to do worse than the dollar in the first half,” Woo told reporters in Taipei on Monday. “We expect further slowdown in emerging-market economies.”
The global recession is damping demand for computers and handsets made by Taiwanese companies, reducing their overseas earnings. Foreign investors have sold US$400 million more Taiwan equities than they bought this month after a government report last week showed exports plunged by a record 42 percent from a year earlier last month.
The NT dollar may reach NT$33.50 in the next week, as a slump in intra-Asian trade is reflected in export data from Taiwan, South Korea and Singapore, said Wai Ho Leong, a regional economist at Barclays in Singapore.
“Intra-Asian trade has collapsed,” he said in an interview yesterday. “Taiwan, Singapore and Malaysia are low-yielding currencies which are also export-oriented economies.”
The gap between US benchmark rates and those elsewhere will narrow, bolstering the greenback, as monetary authorities worldwide lower borrowing costs to help their economies, London-based Woo said.