The New Taiwan dollar fell, leading declines in Asian currencies this week, on speculation the central bank will seek a weaker exchange rate to aid exporters as the US economy slows.
The NT dollar capped its biggest weekly decline in two years after data showed the US economy, the world’s biggest, grew slower than economists forecast in the second quarter and shrank in the final three months of last year.
Taiwan’s central bank “could turn its focus to help exporters now that the US outlook is not all that good,” said Forest Chen, chief economist in Taipei at Taiwan Securities Investment Advisory Co (台証投顧). “Foreign investors are selling stocks because higher energy and labor costs are hurting profits at exporters.”
The NT dollar weakened to NT$30.645 on Friday, according to Taipei Forex Inc. The currency dropped 0.8 percent this week, the most since July 2006.
Taiwan’s GDP may rise 4.78 percent this year, after climbing 5.72 percent last year, the statistics bureau forecast in May. Foreigners sold the equivalent of US$4.03 billion more Taiwanese stocks than they bought last month, according to Taiwan Stock Exchange data.
Taiwan’s currency rallied in the first half after President Ma Ying-jeou (馬英九) won the March election by pledging closer economic ties with China.
China’s yuan fell 0.35 percent to 6.8425 per dollar in Shanghai from 6.8189 a week ago, according to the China Foreign Exchange Trade System. That’s the biggest weekly drop since a peg against the dollar was scrapped in July 2005.
Traders in the forwards market scaled back expectations for the size of its advance over the next 12 months after the Politburo, the Communist Party’s top decision-making body, said on July 25 it will focus on “steady” growth after the economy expanded at the slowest pace since 2005 in the second quarter.
Indonesia’s rupiah was the sole gainer among Asia’s 10 most-traded currencies outside Japan as the prospect of higher interest rates drew funds.
The Indonesian rupiah rose 0.3 percent in the past five days to 9,096, extending a winning streak that began at the start of June.
The rupiah advanced on speculation the central bank will raise interest rates next week to curb inflation. Dollar demand from refiners contributed to a decline in South Korea’s won this week, while Thailand’s baht slumped as heightened political risks prompted investors to sell the nation’s stocks.
The Thai baht fell to 33.53 per dollar on Friday, adding to a five-month losing streak.
South Korea’s won dropped to 1,014.60 per dollar for a 0.5 percent loss this week, according to Seoul Money Brokerage Services Ltd.
Malaysia’s ringgit weakened 0.4 percent to 3.2635, its biggest weekly loss since June 13, on concern a US economic slowdown will hurt exports.
Elsewhere, Vietnam’s dong rose 0.3 percent this week to 16,750 per dollar and the Philippine peso weakened 0.4 percent to 44.225. The Singapore dollar declined 0.8 percent to S$1.3699, near a six-week low of S$1.3709.
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