Tue, Aug 06, 2019 - Page 12 News List

NT dollar drops to 30-month low against US dollar

TRADE TENSIONS:Fears that Taiwanese technology firms could suffer from their exposure to China’s electronics supply chain hit the currency and shares

By Crystal Hsu  /  Staff reporter

The New Taiwan dollar yesterday tumbled to a two-and-a-half-year low against the US dollar, shedding 0.8 percent, or NT$0.252, to NT$31.628, as funds fled Taiwan following US President Donald Trump’s announcement on Friday of more tariff hikes on Chinese goods.

Analysts said Trump’s move hurt the outlook of Taiwanese technology firms.

The US dollar opened at NT$31.430, and moved between NT$31.420 and NT$31.650 before the close. Trading volume reached a 10-year high of US$2.164 billion, tallies from the central bank and Taipei Forex Inc showed.

“The depreciation is both deep and fast, as traders are awash with telephone calls to sell the NT dollar,” a trader said by telephone on condition of anonymity.

Adding in the smaller Cosmos Forex Inc, total turnover rose to US$3.24 billion, its highest since April 30, 2009.

The TAIEX slumped 125.63 points, or 1.19 percent, to close at 10,423.41, as foreign institutional players sold a net NT$16 billion in local shares, Taiwan Stock Exchange figures showed.

Taiwanese firms have heavy exposure to China’s electronics supply chains, making their competitiveness susceptible to extra tariff burdens, analysts have said.

Firms in the supply chain for smartphones, PCs and other electronic gadgets were the hardest hit, they said.

Beijing’s decision to retaliate by calling off purchases of US agricultural products augmented the selloff in the NT dollar and shares, the trader said.

The central bank sought to calm the market with a brief statement noting that the NT dollar is relatively stable compared with the South Korean won and Chinese yuan, which fell 1.42 percent and 1.3 percent respectively against the greenback.

The NT dollar is prone to volatility in times of tumult in light of Taiwan’s small and open economy, while external factors, such as yuan’s fall, also contributed to the NT dollar’s retreat, a central bank official said.

The bank said it would not intervene unless it spotted irregular movements, but declined to say if yesterday’s turnover qualified as irregular. It reiterated it would step in to stem excessive currency volatility whenever necessary.

Additional reporting by CNA

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