The New Taiwan dollar on Friday fell to NT$30.716 against the US dollar, its lowest level in 16 months, as regional currencies dropped during the week, dealers said.
Buying in the US dollar strengthened as foreign investors remitted their funds after receiving large cash dividends from their investments in some listed companies in Taiwan, the dealers said.
The NT dollar on Friday fell NT$0.084, or 0.27 percent, against the US dollar after moving between NT$30.630 and NT$30.750.
For the week, the NT dollar shed NT$0.16, or 0.52 percent, from NT$30.556 on July 13, falling to its lowest level since March 15 last year, when it ended at NT$30.840.
Currency traders cut their holdings in the NT dollar in almost all five trading sessions this week on the local foreign exchange market due to a falling Chinese yuan, the dealers said.
Against that backdrop, other regional currencies were eroded amid worry that China would resort to currency depreciation to cushion the impact of its trade tensions with the US, they said.
The NT dollar was also affected by foreign fund outflows this week as a result of the ongoing cash dividend season, dealers said.
In particular, contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) on Thursday issued more than NT$200 billion (US$6.51 billion) in cash dividends.
As foreign institutional investors accounted for about 80 percent of TSMC’s outstanding shares, they pocketed about NT$160 billion in cash dividends on Thursday and started to remit the funds, which placed heavy downward pressure on the NT dollar, the dealers said.
Some market heavyweights such as Cathay Financial Holding Co (國泰金控), Fubon Financial Holding Co (富邦金控), Formosa Plastics Corp (台塑) and Formosa Petrochemical Corp (台塑石化) are to issue their cash dividends soon, the dealers said, adding that foreign investors are expected to also move those funds out of the nation.
Moreover, the yuan is likely to continue to depreciate against the US dollar, adding more downward pressure on the NT dollar down the road, they said.
As a result, the US dollar is likely to move even higher against the NT dollar soon, they added.
Elsewhere on Friday, the US dollar fell across the board, as the latest comments by US President Donald Trump complaining about the strength of the greenback and the rise in US interest rates squashed a rally that took it to a one-year high the previous session.
The US currency extended losses in afternoon trading after CNBC reported that Trump was worried that the US Federal Reserve would raise interest rates twice more this year.
The US dollar index, a measure of its value against a basket of six major currencies, erased three days of gains.
Against the yen, the US dollar recorded its largest daily fall since February.
The latest report, which cited a White House official, followed Trump’s criticism on Thursday of the Fed’s interest rate policy and the strong US dollar, saying that it could hurt the US economy.
Trump earlier told CNBC that a strong US dollar put the US at a disadvantage and he was ready to place tariffs on US$505 billion of imported goods from China.
The rise in the US dollar this year was due in part to the president’s growth-oriented policies, which have bolstered the Fed’s case for raising rates, analysts said.
The fiscal stimulus provided by tax reform is expected to lead to additional inflation and tighter labor markets, TD Securities senior foreign exchange strategist Mazen Issa said in New York.
“The Fed is responding to the inputs that have been provided,” he said.
In afternoon trading, the US dollar index was 0.77 percent weaker at 94.417, after hitting a one-year high of 95.62 in the previous session.
Trump’s comments on trade pulled the Chinese yuan higher to 6.7784 per US dollar in offshore trading.
Over the past three months, the yuan has fallen nearly 8 percent against the greenback.
The People’s Bank of China on Friday dropped the midpoint for a seventh straight trading day to 6.7671 per US dollar, or 0.9 percent weaker than the previous fix of 6.7066.
Friday’s fixing was the lowest since July 14 last year and represented the biggest one-day weakening in percentage terms since June 27, 2016.
A soft patch in the US dollar prompted some relatively high-yielding currencies to regain some balance.
Safe-haven currencies such as the Swiss franc also remain well-supported, with the US dollar down 0.69 percent at SF0.9921.
The Canadian dollar posted steep gains against the US dollar following strong retail sales and inflation data, rising more than 1 percent to C$1.3127.
The euro was also higher, up 0.7 percent at US$1.1725.
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