The New Taiwan dollar yesterday tumbled near a five-year low after China devalued its currency, cutting its reference rate against the US dollar by nearly 2 percent.
The NT dollar closed down 1 percent, or NT$0.32, at NT$32.08 against the greenback in Taipei trading, the lowest since Aug. 31, 2010, when it closed at NT$32.102, the central bank said.
Combined turnover on the Taipei Foreign Exchange and Cosmos Foreign Exchange markets soared to a six-year high of US$2.86 billion — more than triple Monday’s US$863 million.
“It is hard to tell when the local currency market will stabilize after the shocking decision by the People’s Bank of China [PBOC] earlier today [Tuesday],” a trader at a local bank who declined to be named said by telephone.
The People’s Bank of China changed the yuan’s official guidance rate by 1.9 percent to 6.2298 per US dollar, from 6.1162 on Monday.
The one-off devaluation pushed the yuan down 1.83 percent against the US dollar, deeper than the South Korean won’s 1.35 percent decline, central bank data showed. The Singaporean dollar softened 0.88 percent and the Japanese yen ended 0.26 percent lower, data showed.
China’s currency move created a big splash across the region and the world, as the nation of 1.3 billion gains in importance in global trade and economy.
“Local exporters rushed to buy the greenback for fear it may become more expensive going forward,” the trader said.
The central bank had no choice, but to jump on the “depreciation” bandwagon, he said.
Tsai Lien-sheng (蔡練生), secretary-general of the Taipei-based Chinese National Federation of Industries (全國工業總會), said that a depreciation of the NT dollar would be helpful to Taiwanese exports in the short term, but it is not the panacea to declining exports.
An export rebound hinges on a solid, long-term global economic recovery, Tsai added.
Moreover, Taiwan mainly exports information and communications technology products, and it will take time to digest excess inventories, he said.
The NT dollar has gradually, but steadily depreciated after annual exports slumped 13.9 percent in June and another 11.9 percent last month, central bank data showed.
Economists have called for a weaker NT dollar to boost the profit margins of exporters, as the nation’s major trade rivals have done, if the central bank considers a rate cut too drastic.
The ongoing correction on the local stock market could also weigh on the NT dollar in the near term, another currency analyst said by telephone.
The benchmark TAIEX finished 0.86 percent lower at 8,394.14 yesterday, with foreign investors cutting their positions by net NT$2.99 billion and proprietary dealers by NT$1.39 billion, Taiwan Stock Exchange data showed.
The nation’s poor economic showing has scared away foreign funds, while local players are playing it safe by staying on the sidelines, both of which will unfavorable to the NT dollar, the analyst said.
“It is premature to judge the depth of the NT dollar depreciation until major trade partners show restraint,” he said.
Additional reporting by CNA
The CIA has a message for Chinese government officials worried about their place in Chinese President Xi Jinping’s (習近平) government: Come work with us. The agency released two Mandarin-language videos on social media on Thursday inviting disgruntled officials to contact the CIA. The recruitment videos posted on YouTube and X racked up more than 5 million views combined in their first day. The outreach comes as CIA Director John Ratcliffe has vowed to boost the agency’s use of intelligence from human sources and its focus on China, which has recently targeted US officials with its own espionage operations. The videos are “aimed at
STEADFAST FRIEND: The bills encourage increased Taiwan-US engagement and address China’s distortion of UN Resolution 2758 to isolate Taiwan internationally The Presidential Office yesterday thanked the US House of Representatives for unanimously passing two Taiwan-related bills highlighting its solid support for Taiwan’s democracy and global participation, and for deepening bilateral relations. One of the bills, the Taiwan Assurance Implementation Act, requires the US Department of State to periodically review its guidelines for engagement with Taiwan, and report to the US Congress on the guidelines and plans to lift self-imposed limitations on US-Taiwan engagement. The other bill is the Taiwan International Solidarity Act, which clarifies that UN Resolution 2758 does not address the issue of the representation of Taiwan or its people in
US Indo-Pacific Commander Admiral Samuel Paparo on Friday expressed concern over the rate at which China is diversifying its military exercises, the Financial Times (FT) reported on Saturday. “The rates of change on the depth and breadth of their exercises is the one non-linear effect that I’ve seen in the last year that wakes me up at night or keeps me up at night,” Paparo was quoted by FT as saying while attending the annual Sedona Forum at the McCain Institute in Arizona. Paparo also expressed concern over the speed with which China was expanding its military. While the US
SHIFT: Taiwan’s better-than-expected first-quarter GDP and signs of weakness in the US have driven global capital back to emerging markets, the central bank head said The central bank yesterday blamed market speculation for the steep rise in the local currency, and urged exporters and financial institutions to stay calm and stop panic sell-offs to avoid hurting their own profitability. The nation’s top monetary policymaker said that it would step in, if necessary, to maintain order and stability in the foreign exchange market. The remarks came as the NT dollar yesterday closed up NT$0.919 to NT$30.145 against the US dollar in Taipei trading, after rising as high as NT$29.59 in intraday trading. The local currency has surged 5.85 percent against the greenback over the past two sessions, central
RSS