The New Taiwan dollar continued to slip and hit NT$31.105 versus the US dollar yesterday, while the central bank seemed unwilling to intervene and stem the local currency’s decline.
The NT dollar shed 0.44 percent in Taipei trading yesterday, reaching its lowest level since Feb. 8 last year, when the local unit traded at 31.128 to the US dollar, central bank data showed.
Turnover totaled US$2.5 billion at Taipei Forex Inc and the smaller Cosmos Forex Inc, the highest level in the past four months, the data showed.
Photo: Lu Kuan-cheng, Taipei Times
The NT dollar’s depreciation was in line with the TAIEX, which yesterday closed at 9,806.11 — a slump of 6.31 percent and the biggest one-day drop on the local market, Taiwan Stock Exchange data showed.
“It is very natural to see an outflow of money” as foreign institutions sold NT$30.20 billion in local shares yesterday, Department of Foreign Exchange Director-General Harry Yen (顏輝煌) said at a news conference.
As foreign institutional investors continued to sell local equities, the outflow would naturally lead to a depreciation of the NT dollar, but the exchange rate was decided by market demand and supply, Yen said.
The local currency was relatively stable compared with other major currencies, the central bank said in a statement.
The South Korean won fell 1.02 percent against the US dollar yesterday and China’s yuan dropped 0.03 percent, while the Japanese yen rose 0.97 percent and the Thai baht was 0.47 percent higher, it said.
The central bank would not step in until it sees obvious short-term fluctuations in capital flows that disturb the market, Yen said.
He declined to comment on whether the bank intervened yesterday in the market.
The US dollar has strengthened against other currencies since April, while the NT dollar has depreciated by 4.04 percent against the greenback so far this year, which was lower than the won’s decline of 6.46 percent and the yuan’s decline of 6.08 percent, Yen said.
Over the same period, the euro has weakened 3.44 percent against the US dollar and the Singaporean dollar has retreated by 3.23 percent, the bank’s data showed.
The NT dollar’s depreciation would cause limited harm to the economy, as the government has ample foreign exchange reserves and the nation has no foreign debt, Yen said.
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