Cheaper NT dollar aimed at boosting Taiwan's exports

The New Taiwan dollar fell to a 19-month low yesterday as the government withdrew support of the currency to promote export growth.

The NT dollar ended at NT$32.870 to the US dollar yesterday, weaker from Tuesday's close of NT$32.493 -- its lowest level since April 1999.

The Central Bank of China (中央銀行) admitted yesterday they had in fact withdrawn defense of the currency.

The move was aimed at "maintaining the dynamic stability" of the currency through a calculated fall of the local unit, said George Chou (周阿定), director of the foreign exchange department at the central bank.

"The strategy has proven effective in eradicating abnormal market speculation," Chou said.

Exporters were seen starting to sell US dollars toward the close of the session, he said. A weaker currency makes export goods cheaper to overseas buyers.

The government has tried to boost the stock market this year by using state-controlled funds to buy shares.

Investors estimate the government's NT$500 billion (US$16 billion) National Stabilization Fund has spent more than US$14 billion this year.