The New Taiwan dollar yesterday depreciated the most since January, as equity inflows ebbed amid a rebound in the US dollar.
Taiwan’s stocks snapped an eight-day rally that had been the longest in three years as the market recorded the smallest foreign inflow in two weeks.
A gauge of the US dollar rebounded from a four-month low as demand for emerging-market assets weakened following the release of worse-than-expected Chinese trade data that renewed concerns about global growth.
The central bank said in a report to the Legislative Yuan that was seen by Bloomberg News on Tuesday that it would be difficult to achieve marked economic growth this year.
The report has fueled bets that the bank is likely to add to last year’s two interest rate cuts on Thursday next week.
The NT dollar fell 0.5 percent, the most since Jan. 6, to NT$33.225 versus the US dollar, according to prices from Taipei Forex Inc.
The currency had advanced 0.8 percent against the US counterpart this month, as all 11 major Asian peers tracked by Bloomberg strengthened.
Foreign investors are taking funds out of Taiwan and importers are buying US dollars, according to two traders who asked not to be identified.
“Inflows may be falling as currencies other than the [US] dollar have been in an upward correction for a while,” said Samson Tu (涂韶鈺), a fund manager at Taipei-based Uni-President Asset Management Corp (統一投信). “The general meaning of the central bank’s report shows Taiwan is leaning toward another rate cut this month.”
One-month non-deliverable forwards on the NT dollar fell 0.1 percent to NT$32.860, taking their three-day decline to 1.3 percent, data compiled by Bloomberg show. Global funds bought a net US$87 million Taiwanese shares yesterday, the least since a net sale on Feb. 24.
Maintaining dynamic stability in the NT dollar helps the economy develop steadily in the long run, the central bank said in its report. The inflation outlook is mild and bank loan growth as slowed amid a weakening economic outlook, it added.
Government bonds climbed, with the 10-year yield falling two basis points to 0.808 percent, a record-low close for a benchmark note of that tenor.
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