The central bank may be allowing the New Taiwan dollar to slide in order to boost sagging exports, market watchers say, though bank officials deny there's a policy to deliberately weaken the currency.
In the last 12 months, the NT dollar has lost 12 percent of its value against the greenback.
During Wednesday's trade, the currency plunged 1.1 percent -- a day after the government reported June exports had fallen nearly 17 percent from a year earlier to US$10.3 billion.
The timing of the drop and other factors has led many market watchers to conclude that the bank is allowing the NT dollar to fall in order to boost exports. That in turn would help the economy, which posted glacial growth of just 1.06 percent in the first quarter.
A foreign exchange dealer, speaking on the condition of anonymity, noted that the bank was a major seller of NT dollars on Wednesday.
As the NT dollar hovered at around 34.800, the bank stepped in and bought greenbacks, forcing the NT dollar down to 35.300.
"During the last minutes of trading Wednesday, both the Farmers' Bank of China and Taiwan Cooperative Bank -- which usually buy US dollars on behalf of the central bank -- became very active and rushed to buy US dollars," the dealer said.
"That immediately sent the currency through the 35.00 psychological level, catching all of us by surprise."
Still, Chou A-ting (
James Yang, chief dealer at J.P. Morgan Chase and Co, said further declines could be in the offing, though he declined to say by how much.
"The Taiwan dollar may fall further in a gradual manner, as the fundamentals of the economy have not changed and a depreciation of the currency will lead to more exports for the local economy," Yang said.
"The central bank has already let the currency fall and now it's a matter of extent."
If the economies of Japan and South Korea are any measure, the NT dollar may have further room to drop. The yen is down roughly 15 percent over the past 12 months, while the won had shed more than 16 percent of its value.
The NT dollar closed at 34.976 yesterday, slightly stronger than 35.050 on Wednesday.
In related news, Taiwan may join Singapore in reporting negative economic growth in the second quarter to June, a report yesterday quoted one of Taiwan's top economic planners as saying.
The government has forecast second quarter economic growth of 3.26 percent from a year earlier but Council for Economic Planning and Development Chairman Chen Poh-chih (
"Taiwan's situation is very worrisome," Chen said, given that Singapore has a more developed service sector than Taiwan.
The Singapore economy -- one of Asia's strongest -- has fallen into recession after reporting two consecutive quarters of quarter-on-quarter contraction, the city-state government data showed.
NO HUMAN ERROR: After the incident, the Coast Guard Administration said it would obtain uncrewed aerial vehicles and vessels to boost its detection capacity Authorities would improve border control to prevent unlawful entry into Taiwan’s waters and safeguard national security, the Mainland Affairs Council (MAC) said yesterday after a Chinese man reached the nation’s coast on an inflatable boat, saying he “defected to freedom.” The man was found on a rubber boat when he was about to set foot on Taiwan at the estuary of Houkeng River (後坑溪) near Taiping Borough (太平) in New Taipei City’s Linkou District (林口), authorities said. The Coast Guard Administration’s (CGA) northern branch said it received a report at 6:30am yesterday morning from the New Taipei City Fire Department about a
IN BEIJING’S FAVOR: A China Coast Guard spokesperson said that the Chinese maritime police would continue to carry out law enforcement activities in waters it claims The Philippines withdrew its coast guard vessel from a South China Sea shoal that has recently been at the center of tensions with Beijing. BRP Teresa Magbanua “was compelled to return to port” from Sabina Shoal (Xianbin Shoal, 仙濱暗沙) due to bad weather, depleted supplies and the need to evacuate personnel requiring medical care, the Philippine Coast Guard (PCG) spokesman Jay Tarriela said yesterday in a post on X. The Philippine vessel “will be in tiptop shape to resume her mission” after it has been resupplied and repaired, Philippine Executive Secretary Lucas Bersamin, who heads the nation’s maritime council, said
CHINA POLICY: At the seventh US-EU Dialogue on China, the two sides issued strong support for Taiwan and condemned China’s actions in the South China Sea The US and EU issued a joint statement on Wednesday supporting Taiwan’s international participation, notably omitting the “one China” policy in a departure from previous similar statements, following high-level talks on China and the Indo-Pacific region. The statement also urged China to show restraint in the Taiwan Strait. US Deputy Secretary of State Kurt Campbell and European External Action Service Secretary-General Stefano Sannino cochaired the seventh US-EU Dialogue on China and the sixth US-EU Indo-Pacific Consultations from Monday to Tuesday. Since the Indo-Pacific consultations were launched in 2021, references to the “one China” policy have appeared in every statement apart from the
More than 500 people on Saturday marched in New York in support of Taiwan’s entry to the UN, significantly more people than previous years. The march, coinciding with the ongoing 79th session of the UN General Assembly, comes close on the heels of growing international discourse regarding the meaning of UN Resolution 2758. Resolution 2758, adopted by the UN General Assembly in 1971, recognizes the People’s Republic of China (PRC) as the “only lawful representative of China.” It resulted in the Republic of China (ROC) losing its seat at the UN to the PRC. Taiwan has since been excluded from