The New Taiwan dollar weakened against its US counterpart yesterday after the local bourse retreated and a foreign institute lowered its outlook on the nation’s credit rating on concern of rising public debt, dealers said.
The local currency pared 0.5 percent, or NT$0.17, to NT$33.79 against the greenback at the close of trading, Taipei Forex Inc data showed.
Turnover amounted to US$1.02 billion on the Taipei Forex and US$463 million on the Cosmos Foreign Exchange, adding up to US$1.483 billion in total transactions, statistics from the two companies showed.
A dealer at a local bank linked the decline in the NT dollar to a report on Tuesday by Standard & Poor’s (S&P) Rating Services that cut its outlook on Taiwan’s sovereign rating from “stable” to “negative” citing increasing debt burden.
“The S&P report more or less prompted currency traders to sell NT dollars,” the dealer said via telephone, requesting anonymity.
However, he called the drop a normal development, adding that the NT dollar had traded between NT$33.4 and NT$34 against the US dollar in recent weeks.
Another dealer said a weak TAIEX yesterday was responsible for the depreciation.
“Fund managers probably found it time to realign their equities and currency possessions,” said the dealer, who forecast the NT dollar to trade between NT$33.5 and NT$34.2 in the short run.
“I’m skeptical of the recent upbeat sentiment in the stock market. It seems unfounded, judging from the economic fundamentals,” the dealer said.