Currency plummets below NT$35 level

That plan to spend your hard-earned NT dollars to buy US dollars just got a bit more expensive.

The local currency yesterday fell below the psychologically important NT$35 level to end at a 15-year low of NT$35.05 against the greenback.

The currency has declined 5.9 percent against the greenback so far this year.

The unit closed down 1.1 percent yesterday at 35.050, compared with Tuesday's close of 34.656, on turnover of US$660 million.

The news comes one day after the government reported that the nation's exports fell for a fourth consecutive month in June, shrinking 17 percent from a year ago.

While market watchers speculated that the government was allowing the NT dollar to slide to make exports cheaper to overseas buyers, officials from the central bank denied any such plan.

"The central bank has never sought to steer the NT dollar downward," said Chou A-ting (周阿定), head of the bank's foreign exchange department. Chou also said most of the foreign currency buyers recently have been individuals and added that the market -- which he said has been distorted by speculation -- will "correct itself" according to supply and demand.

But Taiwan "needs a weaker currency to generate some growth" from exports, said Chi Lo, a senior economist at Standard Chartered Bank in Hong Kong.

"The fall of the currency may not be over yet," Chi said. "We see more downside risk for the Taiwan dollar."

A foreign exchange dealer said that the central bank was responsible for a large part of yesterday's drop, as it sold NT dollars heavily to buy greenbacks toward the session's close. As the NT dollar hovered at around 34.800, the dealer said, the bank stepped in and bought greenbacks, forcing the NT dollar down to 35.300.