The New Taiwan dollar fell in the last minute of trading, reversing an earlier advance, on speculation the central bank sold its own currency to support the economy after exports declined by 44.1 percent last month.
“There was a last-minute intervention from the central bank,” said Daniel Soh, an economist at Forecast Pte in Singapore. “The thin market conditions in late trade exaggerated the move.”
The NT dollar weakened 0.6 percent to 33.96 at the 4pm close of trade in Taipei, after strengthening as much as 0.4 percent. Central bank officials weren’t immediately available for comment.
The nation’s currency is starting to feel the pain of China’s economic slowdown as exports across the Strait decline.
Changshu Shengtian Knitting & Clothing Co in China stopped ordering cloth from Taiwan this year and began buying less expensive local fabric because “there’s no sign of even a slight increase in overseas orders this year,” said Tang Zhenya, a salesman at the company in the eastern city of Changshu. “So we turned back to cheaper mainland suppliers.”
China’s customs bureau reported that imports from the rest of Asia plunged to US$43 billion in December, from a record of US$70 billion in July. Asian countries that depend on exports to their neighbors will suffer the most from the 39 percent collapse in the trade, said CLSA Asia-Pacific Markets, which predicted last week that Taiwan and Singapore’s economies will shrink at least 10 percent this year.
“The market has been expecting the central bank to drive the NT dollar lower after it knocked down the currency in late trading on Friday,” said Lucas Lee, an economist at Mega Securities Co (兆豐證券) in Taipei.
Barclays PLC and Morgan Stanley say the currencies of the two Asian hubs for electronics, petrochemicals and shipping will fall more than previously forecast. The NT dollar, which lost 1.3 percent against the US dollar last year, will weaken to NT$35.3 by the end of the year for a loss of 3.8 percent, Morgan Stanley said on Jan. 29. The average estimate in a Bloomberg News survey of 23 economists was for it to drop to NT$34 per US dollar.
“Intra-Asian trade has collapsed,” said Wai Ho Leong, a regional economist at Barclays in Singapore. “Taiwan, Singapore and Malaysia, export-oriented economies, can be expected to see their currencies drift lower.”
The yield on the 2.125 percent bond maturing September 2018 was at 1.5 percent as of the 1:30pm close, GRETAI Securities Market data showed. Its price climbed 0.019 to 105.5508.