The New Taiwan dollar yesterday retreated against the US dollar for the fourth consecutive session, slipping past the NT$30 mark for the first time since Jan. 16 this year.
The local currency slid as the greenback gathered strength across the board amid falling crude oil prices and rising concern that the global economy was slowing because of the eurozone’s lingering debt problems, traders said.
A 2.98 percent plunge in the local bourse added to the selling pressure on the NT dollar, with foreign institutional investors selling a net NT$2.695 billion (US$89.7 million) in local shares yesterday, Taiwan Stock Exchange data showed.
At the close of trading in Taipei, the NT dollar was down NT$0.119, or 0.4 percent, to NT$30.050 against the greenback — its lowest level in more than four months, Taipei Forex Inc data showed.
Turnover was US$861 million on the Taipei Forex yesterday. Including turnover on the smaller Cosmos Foreign Exchange, total transactions reached US$1.267 billion.
The NT dollar fell by as much as NT$0.135, or 0.45 percent, to NT$30.066 in mid-session yesterday, before the central bank stepped in to curb the local currency’s losses, according to a currency dealer at the Union Bank of Taiwan (聯邦銀行), who preferred to remain anonymous.
“The short-term outlook for the NT dollar is bearish, because the central bank would be happy to see the local currency gradually turn weak to help lift exports and economic growth in the second half,” he said.
The local currency — which last dipped past the NT$30 mark to close at NT$30.07 on Jan. 16 — like most Asian currencies in recent weeks, has been dragged down by Europe’s sovereign debt problems with the NT dollar dropping 2.15 percent against the US currency last month, while the South Korean won fell 4.45 percent in the same period.
However, the NT dollar last week slid 0.95 percent against the greenback, while the won rose 0.66 percent, an indication that the central bank has strengthened its stance of keeping the NT dollar’s value relatively weak, according to the Union Bank dealer.
The latest data from the government indicated that GDP would expand by just 0.77 percent in the second quarter, with exports expected to contract by 2.55 percent.
With the government also revising downward its full-year economic growth forecast to 3.03 percent from the 3.38 percent it estimated in April, the central bank has more reason to worry about economic growth rather than inflationary pressures, said Laura Ho (何緯婷), an economist at Grand Cathay Investment Services Corp (大華投顧).
“With the continued foreign capital outflows from Taiwan as traders seek refuge in the US dollar amid Europe’s escalating debt crisis, the central bank is likely to go along with the trend and allow the NT dollar to go even lower to boost exports,” Ho said in a note yesterday.