The New Taiwan (NT) dollar yesterday fell to a three-year low against the US dollar on speculation the central bank stepped up intervention to weaken the local currency and safeguard exports after the yen tumbled.
Japan’s exchange rate dropped 0.8 percent to a seven-year low on speculation Japanese Prime Minister Shinzo Abe might delay a planned sales-tax increase, while South Korea’s won declined 0.6 percent.
Taiwanese electronics exporters compete against South Korean and Japanese companies in international markets.
The NT dollar closed down NT$0.111, or 0.4 percent, at NT$30.717 against its US counterpart, Taipei Forex Inc prices showed.
Turnover totaled US$516 million during the trading session, down from US$689 million the previous session.
The NT dollar earlier yesterday touched NT$30.720, the weakest since Oct. 4, 2011.
The local currency slipped 0.5 percent in the last half hour of trading, compared with an average 0.2 percent drop this year.
The central bank has sold the NT dollar in the run-up to the close on most days since March 2012, according to traders who asked not to be identified.
The central bank’s move on Monday erased the NT dollar’s gains of NT$0.11.
Dealers said that as long as other regional currencies such as the yen and won continue to trend lower, buying by the local central bank to bolster the greenback is likely to continue.
“The yen depreciating has led to the won falling, so there’s no reason why Taiwan’s dollar wouldn’t also weaken,” Taipei-based Uni-President Assets Management Corp (統一投信) fund manager Samson Tu (涂韶鈺) said.
A planned trade pact between China and South Korea would put further pressure on Taiwanese exporters, Tu said.
The China-South Korea free-trade agreement would directly impact several of Taiwan’s industrial sectors, including steel, machine tools, automobiles, displays, petrochemicals, textiles and glass, he added.
On Monday, the Ministry of Economic Affairs said the deal would cost Taiwan between NT$260 billion and NT$650 billion (US$8.5 billion and US$21.25 billion) over time, adding that this would lead to a 0.5 percent drop in GDP, a 1.34 percent fall in exports and a US$8.9 billion loss in overall output value.
Additional reporting by CNA
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