Tue, Aug 11, 2009 - Page 12 News List

Local currency declines for third day

BLOOMBERG

The New Taiwan dollar yesterday fell for a third day, extending its retreat from a two-month high, on concern the central bank would intervene to prevent appreciation that may prolong an export slump.

Overseas sales last month dropped 22 percent from a year earlier, the smallest decline since November, the government said on Friday, when Typhoon Morakot closed financial markets.

“With all the good economic reports, the flavor for the Taiwan dollar should be positive, but the central bank does not want it to be the only one strengthening relative to other Asian emerging markets,” said David Cohen, an economist at Action Economics in Singapore. “The [central bank] wants the market to get nervous about intervention so they won’t even have to do it.”

The NT dollar closed at NT$32.818 versus the greenback, from NT$32.79 last Thursday on turnover of US$750 million, Taipei Forex Inc said. It reached NT$32.62 last Wednesday, the strongest since June 5, and Cohen forecast a year-end rate of NT$31.50.

The NT dollar strengthened in three of the last four weeks as signs a global recession was easing brightened the outlook for exports and helped spur demand for emerging-market assets. Overseas investors bought US$2.1 billion more of the nation’s shares than they sold last month, and this year’s net purchases total US$7.2 billion, exchange data shows.

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