Amid escalating currency depreciation in the region, the New Taiwan dollar fell more than the South Korean won this week as the central bank wanted a cheaper currency to protect Taiwanese exporters, data showed yesterday.
The NT dollar fell 0.62 percent from a week earlier to close at NT$31.226 against the US dollar on Friday, while the South Korean currency slid 0.31 percent to 1,114,63 won against the greenback.
Market analysts said that the NT dollar’s losses largely stemmed from central bank intervention to prop up the greenback to keep the local currency low in the face of weak exports and amid local businesses’ call to send the local unit even lower.
Taiwanese exports last month dropped 3.8 percent from a year earlier, marking a fourth consecutive month of decline, as global demand for electronics gadgets fell.
According to Franklin Templeton Investments, the weakness of the won resulted from fears that an outbreak of Middle East respiratory syndrome Coronavirus (MERS-CoV) could impact the South Korean economy. The Bank of Korea’s move to cut key interest rates also sent the won lower.
As Taipei and Seoul compete with each other head to head in the global market, Taiwan’s central bank is known to follow closely the won and step up with measures to intervene in the Taiwan dollar’s value, when it sees a need to do so, analysts said.
Regionwide, Asian currencies dropped this week, led by Malaysia’s ringgit, as funds pulled money from emerging markets on signs the US was moving closer to raising interest rates.
Overseas investors sold a net US$1.7 billion of stocks in Taiwan, South Korea and India since June 5, exchange data showed.
“Expectations for a US rate hike are weighing on the region and we’re seeing outflows,” said Stella Lee, president of Success Wealth Management Ltd in Hong Kong. “The MERS outbreak could also hurt economic growth in Asia.”
The ringgit fell 1.1 percent since June 5 as of 4:08pm in Kuala Lumpur, according to data compiled by Bloomberg. India’s rupee dropped 0.5 percent and the Philippine peso declined 0.6 percent through Thursday, with local markets closed on Friday for a public holiday.
The ringgit weakened on Friday, reversing an earlier advance, after a report in a German newspaper that government officials are preparing for a Greek default dampened demand for emerging-market assets.
The Philippine currency closed at the weakest level since March last year on Thursday as data from Bangko Sentral ng Pilipinas showed there were US$569 million of net portfolio outflows last month, compared with US$31 million in April.
The peso is market-determined and the monetary authority is comfortable with that, Bangko Sentral Deputy Governor Diwa Guinigundo said in an interview in Manila on Wednesday.
Thailand’s baht was the only major gainer in Asia this week, climbing 0.5 percent, as the Bank of Thailand held its benchmark interest rate on Wednesday after two consecutive cuts.
Elsewhere in Asia, Indonesia’s rupiah fell 0.3 percent and China’s yuan declined 0.07 percent. Vietnam’s dong advanced 0.1 percent.
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