The New Taiwan dollar weakened NT$0.251, or 0.7 percent, to trade at NT$33.801 against the greenback yesterday on strong demand for the US currency and last-minute sales by the central bank, dealers said.
The local currency hovered around NT$33.6 for most of the trading session until the last 15 minutes when the central bank reportedly dumped US$150 million worth of NT dollars, a dealer said, asking not to be named.
Turnover was US$840 million on the Taipei Forex Inc, company data showed. Including transactions of US$418 million on the smaller Cosmos Foreign Exchange, total trade was US$1.258 billion, statistics from the two exchanges showed.
“The size of the drop is surprising,” the dealer said by telephone. “I had expected the local currency to trade at NT$33.5 versus its US counterpart.”
The dealer attributed the NT dollar’s weakening to the record decline of 33 percent in export orders as unveiled by the Ministry of Economic Affairs earlier in the day.
“By devaluing the NT dollar, the monetary regulator probably wanted to placate exporters,” he said.
However, central bank Governor Perng Fai-nan (彭淮南) said days before the Lunar New Year that a weak NT dollar would offer limited help in boosting exports as declining orders resulted from shrinking demand, not uncompetitive prices.
The South Korean won traded at 1,390 against the US dollar yesterday, down from 1,368 a day earlier, foreign exchange data showed.
The dealer said it was premature to interpret the NT dollar’s latest decline as a change of policy on the part of the central bank.
“It remains to be seen if the drop is an isolated incident or a trend,” he said. “It is better to postpone judgment until after the Lunar New Year holidays.”
The foreign exchange market will be closed all next week for the holidays.