The New Taiwan dollar fell to a four-year low yesterday on speculation that overseas funds would pull money from emerging markets as the US dollar strengthens.
The Bloomberg Dollar Spot Index, which tracks the US currency against 10 peers, headed for its highest close since 2009, as a collapse in crude prices weakened the exchange rates of oil exporters and supported the world’s largest economy.
The NT dollar has declined 2.2 percent this quarter, trailing a 5.2 percent drop in South Korea’s won. Exporters from the two economies compete in international markets.
“We expect to see outflows across Asia today [yesterday] as there is a strong [US] dollar dynamic in the region related to oil, which has seen a dramatic fall,” said Eddie Cheung, a currency strategist at Standard Chartered PLC in Hong Kong.
There is still room for the NT dollar to weaken further, as its depreciation has lagged behind the won’s, Cheung said.
The NT dollar closed down 0.3 percent at NT$31.139 per US$1, the weakest since October 2010, Taipei Forex Inc prices show.
One-month non-deliverable forwards dropped 0.2 percent to NT$31.062 and touched a four-year low of NT$31.104 earlier, according to data compiled by Bloomberg.
Brent crude fell 3 percent to US$68.06 per barrel yesterday, after a 13 percent plunge last week as OPEC resisted calls to reduce production to ease a supply glut.
The TAIEX fell 0.8 percent yesterday, after the Chinese Nationalist Party (KMT) suffered its worst defeat in Saturday’s local elections, prompting Premier Jiang Yi-huah (江宜樺) to resign.
Government bonds gained, pushing the yield on the 1.625 percent notes due September 2024 down 1 basis point, or 0.01 percentage point, to 1.579 percent, GRETAI Securities Market prices show.
The Ministry of Finance sold NT$30 billion worth of 10-year debt yesterday at 1.59 percent, lower than then 1.6 percent median estimate in a Bloomberg News survey.
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