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
AIR SUPPORT: The Ministry of National Defense thanked the US for the delivery, adding that it was an indicator of the White House’s commitment to the Taiwan Relations Act Deputy Minister of National Defense Po Horng-huei (柏鴻輝) and Representative to the US Alexander Yui on Friday attended a delivery ceremony for the first of Taiwan’s long-awaited 66 F-16C/D Block 70 jets at a Lockheed Martin Corp factory in Greenville, South Carolina. “We are so proud to be the global home of the F-16 and to support Taiwan’s air defense capabilities,” US Representative William Timmons wrote on X, alongside a photograph of Taiwanese and US officials at the event. The F-16C/D Block 70 jets Taiwan ordered have the same capabilities as aircraft that had been upgraded to F-16Vs. The batch of Lockheed Martin
US President Donald Trump yesterday announced sweeping "reciprocal tariffs" on US trading partners, including a 32 percent tax on goods from Taiwan that is set to take effect on Wednesday. At a Rose Garden event, Trump declared a 10 percent baseline tax on imports from all countries, with the White House saying it would take effect on Saturday. Countries with larger trade surpluses with the US would face higher duties beginning on Wednesday, including Taiwan (32 percent), China (34 percent), Japan (24 percent), South Korea (25 percent), Vietnam (46 percent) and Thailand (36 percent). Canada and Mexico, the two largest US trading
GRIDLOCK: The National Fire Agency’s Special Search and Rescue team is on standby to travel to the countries to help out with the rescue effort A powerful earthquake rocked Myanmar and neighboring Thailand yesterday, killing at least three people in Bangkok and burying dozens when a high-rise building under construction collapsed. Footage shared on social media from Myanmar’s second-largest city showed widespread destruction, raising fears that many were trapped under the rubble or killed. The magnitude 7.7 earthquake, with an epicenter near Mandalay in Myanmar, struck at midday and was followed by a strong magnitude 6.4 aftershock. The extent of death, injury and destruction — especially in Myanmar, which is embroiled in a civil war and where information is tightly controlled at the best of times —
China's military today said it began joint army, navy and rocket force exercises around Taiwan to "serve as a stern warning and powerful deterrent against Taiwanese independence," calling President William Lai (賴清德) a "parasite." The exercises come after Lai called Beijing a "foreign hostile force" last month. More than 10 Chinese military ships approached close to Taiwan's 24 nautical mile (44.4km) contiguous zone this morning and Taiwan sent its own warships to respond, two senior Taiwanese officials said. Taiwan has not yet detected any live fire by the Chinese military so far, one of the officials said. The drills took place after US Secretary
RSS