Wed, Sep 09, 2015 - Page 13 News List

New Taiwan dollar drops steeply against greenback

By Crystal Hsu  /  Staff reporter

The New Taiwan dollar yesterday shed NT$0.068, or 0.21 percent, to close at a six-year low of NT$33.003 against the greenback in Taipei trading.

The fall came a day after the release of official data, which showed that exports plunged 14.8 percent last month from a year earlier, an ominous sign for the nation’s trade-dependent economy.

Combined turnover on the Taipei Foreign Exchange and Cosmos Foreign Exchange markets amounted to US$1.16 billion, a moderate increase from US$1 billion on Monday.

“The central bank might allow the NT dollar to weaken further to support economic growth after exports deteriorated,” a trader at a local bank said on condition of anonymity because the monetary policymaker frowns on comments about the local currency.

A weaker NT dollar could help boost the competitiveness and profitability of exporters, as most companies settle their business in US dollars and could book foreign exchange gains.

The NT dollar has declined 6.2 percent so far this quarter, which could raise the bottom lines of major technology companies despite slack business amid a global slowdown, especially in China, the largest destination for Taiwanese exports.

The trader said he could not speculate on a support level for the local currency as global central banks continue to implement quantitative easing and weaken their currencies to stimulate growth.

In addition, rising expectations of an interest rate hike by the US Federal Reserve next week could spur investors and companies alike to increase their US dollar holdings, the trader said.

That would drive up the value of the US dollar, while its counterparts, such as the NT dollar, weaken, the trader said.

“All eyes are on the Fed’s move on Sept. 17, which may create a big splash on financial markets around the world,” the trader said.

The NT dollar’s 0.21 percent drop was smaller than the Japanese yen’s 0.71 percent and the Thai baht’s 0.3 percent decline, the central bank said in a statement.

The Chinese yuan closed up 0.02 percent, while the South Korean won gained 0.23 percent, the statement said.

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