The New Taiwan dollar had its worst month in seven years on concern that cooling demand in the US and Europe will hurt the nation’s exports.
The currency dropped a sixth straight week against the US dollar, the longest losing streak in more than a year, after the government cut its economic growth forecast and reported the smallest increase in export orders in five years.
“It’s a rotation of risk,” said Jimmy Koh, head of economic treasury research at United Overseas Bank Ltd in Singapore. “Over the last six months the rest of the world was holding up pretty well, but is now feeling the pinch on the US front, as reflected in their export numbers. You’re seeing that in Singapore, [South] Korea and Taiwan.”
The NT dollar declined 0.1 percent to NT$31.52 per US dollar as of the 4 pm close, the Taipei Forex Inc said. The currency, which touched a six-month low of NT$31.571 on Tuesday, has dropped 0.5 percent this week and 2.9 percent since the end of last month.
All of the 10 most-active Asian currencies outside Japan dropped against the US dollar this month, led by South Korea’s won, as overseas funds dumped stocks on concern that slowing global growth will damp demand for Asian exports just as central banks grapple with quickening inflation.
The won posted its biggest monthly decline since August 1998 and Malaysia’s ringgit had its worst month since the end of a US dollar link in 2005.
“It’s been a bad environment for stocks with persistent inflation eroding the value of assets and people have been disappointed with the growth numbers coming out of the region,” said Sean Callow, senior currency strategist at Westpac Banking Corp in Sydney. “With that comes a fading of confidence in currencies in the region as well.”
South Korea’s currency dropped 0.7 percent to 1,089 against the US dollar as of the 3pm close, Seoul Money Brokerage Services Ltd said, taking the decline in this month to 7.1 percent, Asia’s worst performer.
The ringgit, the second-biggest loser in the region, fell 4.1 percent this month and the NT dollar 2.6 percent.
Overseas investors sold more stocks than they bought this month in South Korea, Thailand, the Philippines, Taiwan and Indonesia, data compiled by Bloomberg shows.
South Korea’s central bank said yesterday that the current-account balance returned to a deficit last month as a weaker currency and rising oil prices increased the import bill. Policymakers have intervened in the market to curb losses in the currency.
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