Sun, Nov 09, 2014 - Page 15 News List

Weak yen drags NT dollar, won lower

TOKYO TIE:A depreciating yen is disconcerting for Taiwan and South Korea, since it makes their exports less competitive as they fight for dominance of overseas markets

Bloomberg

Asian currencies posted their second consecutive decline this week, as a slide in the yen threatened to crimp the export competitiveness of Taiwan and South Korea.

The New Taiwan dollar posted its biggest weekly drop since March on the back of speculation that the central bank intervened to aid exporters as the yen and the won fell, spurred by the Bank of Japan’s decision to add to its monetary stimulus last week.

Taiwanese electronics exporters such as HTC Corp (宏達電) compete against the likes of South Korea’s Samsung Electronics Co and Japan’s Sony Corp in overseas markets.

The strengthening of the US dollar over prospects that the US Federal Reserve will raise interest rates also weighed on Asian currencies.

“As the yen fell, there has been more pressure on the currencies of economically related places like South Korea and Taiwan,” said Andrew Tsai (蔡耀德), an economist at KGI Securities Investment Advisory Co Ltd (凱基證券投顧) in Taipei. “As the yen and the euro fell, the [US] dollar has also been rising, so Asian currencies have tended to depreciate.”

The NT dollar dropped 0.78 percent this week to NT$30.716 against its US counterpart and fell 0.4 percent on Friday, Taipei Forex Inc prices show. That is the biggest weekly decline since the five-day period through March 21.

The yen declined 2.5 percent versus the greenback from a week ago, while the won fell 2.3 percent.

Taiwan’s currency fell 0.2 percent in the last 28 minutes of trading on Thursday amid suspected central bank intervention. The monetary authority has sold the local unit in the run-up to the close on most days since March 2012, according to traders who asked not to be identified.

The won led losses in the region as the yen fell to a seven-year low after the Bank of Japan unexpectedly expanded stimulus last week to combat deflation. Asian currencies fell as the Bloomberg Dollar Spot Index, which tracks the greenback against 10 peers, climbed 1 percent to 1,091.46 this week in New York.

“The momentum of the [US] dollar and the yen dragged the market lower across the region,” said Saktiandi Supaat, head of foreign exchange research at Malayan Banking Bhd in Singapore. “The move could be overdone and may be retraced.”

The won this week declined the most since June last year, dropping to 1,093.43 per US dollar in Seoul, data compiled by Bloomberg show.

The Bank of Korea said in a statement on Monday that it is closely monitoring the weak yen’s impact on South Korea’s overseas sales, economy and financial system.

In Malaysia, the ringgit fell 1.7 percent to 3.3457 — the steepest drop since September last year — dropping for a fourth week as crude prices slid to the lowest level since 2011. Oil accounted for 30 percent of Malaysia’s state revenue last year.

“Malaysia is the only net oil exporter in the region and is most affected by oil prices,” said Nizam Idris, head of strategy for fixed income and currencies at Macquarie Bank Ltd in Singapore.

Elsewhere in the region, the baht lost 0.6 percent this week to 32.787 per US dollar and the rupiah weakened 0.7 percent to 12,170 as official data showed Indonesia’s third-quarter economic growth was the slowest pace in five years.

Meanwhile, the Philippine peso depreciated 0.3 percent to 45.045, India’s rupee fell 0.4 percent to 61.6375 and the yuan declined 0.1 percent to 6.1229.

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