The NT dollar yesterday weakened to a six-month low against its US counterpart as South Korea’s won tumbled to its lowest level since 2004, fueling concern Taiwan may lose ground in competing for exports, dealers said.
The NT dollar declined NT$0.157, or 0.5 percent, to trade at NT$31.75 against the greenback, Taipei Forex Inc data showed. It had dropped 0.8 percent earlier in the day to NT$31.85, its lowest level since Feb. 13.
Turnover was US$1.572 billion. Including turnover of US$496 million on the smaller Cosmos Foreign Exchange, total transactions reached US$2.068 billion.
A trader at Union Bank of Taiwan (聯邦銀行) attributed the decline of the NT dollar primarily to a plunging won that closed at 1,132.9 against the US dollar on speculation that South Korean authorities would not halt declines in the currency.
“A weakening won is responsible for the depreciation of the NT dollar,” a trader, who wished to remain anonymous, said yesterday. “Both economies are driven by exports. Taiwan would lose export competitiveness if its currency remains strong while the won keeps weakening.”
The trader said he believed the NT dollar would continue to devalue as demand for the US dollar was set to intensify while oil prices head down.
“The central bank, which has displayed a keen concern for economic growth, will probably stay on the sidelines,” he said.
The central bank said in a faxed statement the NT dollar was relatively stable, noting that the won, the yen, the Singapore dollar and the euro all posted steeper declines yesterday.
Another local currency trader at Ta Chong Bank (大眾銀行) said that Taiwan dollar would depreciate to NT$32 later this week or this month.
“I believe the local currency will trade between NT$31.99 and NT$32 the coming days,” the trader said, asking not to be named. “The central bank will not sit around once the NT dollar drops below the range.”
The trader said the central bank has made fighting inflation its topmost goal and a weaker NT dollar would counter the goal.
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