Taiwan dollar hits 5.5-year low
Updated: 2009-02-18 07:16
(HK Edition)
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TAIPEI: The Taiwan dollar sank to more than a 5.5-year low yesterday on worries over the economy, a day before the island was expected to release its GDP (gross domestic product) figures, with the central bank helping to push the currency lower.
The dollar, which has fallen for two weeks, ended at its intraday low of NT$34.620 per US dollar, the weakest finish since June 13, 2003, when it closed at NT$34.645.
It was nearly a 1 percent decline from Monday's close of NT$34.280, and a mainland official's comments on the yuan not facing pressure to firm also helped push the Taiwan dollar lower in late trade.
The central bank, which keeps the Taiwan dollar in a managed float, has been buying US dollars to ensure the local currency fell, but not too sharply, to maintain export competitiveness without making imports too expensive.
"All the Asian currencies are weakening - the yuan, the Singapore dollar, the Korean won and the Philippine peso - so the Taiwan dollar is just following that trend," a dealer in Taipei said. "The central bank was asking some banks to buy US dollars because the Taiwan dollar still had some room to weaken compared with the other currencies."
One-month implied volatility on the Taiwan dollar rose to 9.5 percent from 8.4 percent the previous day, but that was only the highest since January and suggested option-market players were not betting on a sharp fall.
The central bank put out a statement after the market closed, reiterating previous comments that the Taiwan dollar was relatively stable.
The statement had a list of currencies, showing that the Taiwan dollar's 1 percent fall was smaller than the won's 2 percent decline and the Australian dollar's 1.7 percent drop.
But the Taiwan dollar's fall was bigger than the euro and the Singapore dollar's 0.9 percent drop, and the yen's 0.7 percent decline.
"Of course the GDP figures on Wednesday might look bad, too," another dealer said. "The weakening trend will hold over the next couple of days."
The market has been concerned with the health of Taiwan's economy, especially after exports slumped at a record pace, likely pulling down the island's fourth-quarter GDP. The Taiwan dollar has lost 5.4 percent since the start of the year.
Taiwan's statistics agency should release its GDP figures today. Local stocks fell 2.17 percent yesterday on a slump in DRAM companies as foreign funds sold a net NT$5.91 billion ($171 million) in Taiwan shares during the session.
Volume on the main Taipei Forex Inc exchange was $839 million, higher than the $800 million on Monday.
Reuters
(HK Edition 02/18/2009 page16)