The New Taiwan dollar’s value against the US dollar fell to its lowest level in more than four months yesterday, joining the falling trend shown by several other major Asian currencies after the yen dropped to a more than two-year low.
Meanwhile, the central bank issued a statement at noon that it would intervene if necessary, citing concerns of the negative impacts from the quantitative easing measures adopted by both the US and Japan to justify its intervention.
The NT dollar fell NT$0.31, or 1.05 percent, to close at NT$29.56 against the US dollar in the Taipei Forex Inc, marking its lowest level since Sept. 13 last year.
On the smaller Cosmos Foreign Exchange market, the NT dollar ended at NT$29.519 against the greenback.
Daily trading volume stood at US$2.29 billion, with US$1.57 billion on the Taipei Forex Inc and US$714 million on the Cosmos.
“By increasing their capital outflow, foreign companies yesterday, raised demand in the US dollar” a Taipei-based currency trader at the Taiwan Business Bank (臺灣企銀), who refused to be named, said by telephone.
Following the NT dollar’s decline in the morning session, local exporters continued selling some of the NT dollars they held in the afternoon session, strengthening the currency’s falling trend, she said.
The trader said the depreciation in the NT dollar yesterday was in line with the falling pace shown by the South Korean won, with the trend for both currencies expected to stay the same in the near future, reinforcing export competitiveness.
Unless Taiwan sees its export momentum rebound significantly, the trader said the NT dollar may not appreciate too much in the near future under the current cautious economic sentiment.
That may make the NT dollar fluctuate around the level of NT$29.5 versus the US dollar before the Lunar New Year holidays, she added.
The central bank said that it would maintain stability in the local currency market “as disorderly movements may harm the steadiness for Taiwan’s economic and financial market,” according to the bank’s statement.
The bank said that continuous quantitative easing measures in the US and Japan have increased public concern about the possibility of a currency war.
Central bank Deputy Governor Yang Chin-lung (楊金龍) said he did not view the decline in the NT dollar yesterday as an disorderly movement.
However, another trader at the Union Bank of Taiwan (聯邦銀行) said regional central banks were keeping a close eye on each other before making a next move.
The trader, who wished to remain anonymous, said the NT dollar may further decline against the US dollar if the yen fell further.