Reversing a 12-day slump, the New Taiwan dollar yesterday staged a rebound against the greenback on what dealers called a technical price adjustment before heading toward a new low amid the economic downturn.
The local currency gained NT$0.18, or 0.5 percent, to close at NT$34.628 against the greenback, after dropping 2.2 percent last week and 5.6 percent this year. Turnover reached US$1.027 billion on the Taipei Forex, company data showed. Including transactions of US$4.18 billion on the smaller Cosmos Foreign Exchange, total trade reached US$1.446 billion, statistics from the two exchange firms showed.
A dealer at a foreign bank based in Taipei attributed the rebound to equity market rallies at home and overseas as well as temporary exits by profit-takers.
The NT dollar opened at NT$34.808 and fluctuated between NT$34.60 and NT$34.862 during trading, defying market expectations that it would drop below the NT$35 level to reflect the nation’s economic woes.
“The central bank, while it is in favor of a weaker NT dollar, appears to have intervened to slow the decline,” the dealer said by telephone, requesting anonymity.
Following complaints by importers about an excessive decline in the currency, the central bank said in a statement later in the day that it would not remain idle while drastic swings occur in foreign-exchange markets.
“The central bank will make adjustments if the exchange rate does not mirror economic fundamentals,” the monetary regulator said in the statement.
A dealer at Union Bank of Taiwan (聯邦銀行) linked the NT dollar’s showing to that of the South Korean won, which also gained against the greenback yesterday.
The dealer said the adjustment could last one or two months before the currency breaks the NT$35.30 threshold, the lowest since 2001.
“I cannot see any reason why the NT dollar should not depreciate in light of the economic data,” the dealer said by telephone.