Taiwan dollar falls most in 7 months


The China Post staff and agencies

The New Taiwan dollar on the Taipei Foreign Exchange declined the most in seven months yesterday on speculation investors are exiting emerging markets as losses linked to U.S. subprime mortgages rise.

A total of US$1.25 billion changed hands during the day’s trading. The NT dollar opened at the day’s high of NT$32.963 and hit a low of NT$33.170 during the trading session. The Taiwan dollar had weakened to as low as NT$33.170 to the U.S. dollar, compared with the previous close of NT$33.010 to the U.S. dollar. The local currency ended at NT$33.128.

“Everybody is out in the market — importers, foreign banks and domestic banks. Everyone’s buying U.S. dollars, given the stock market slump,” said a dealer.

The Taiwan dollar lost 1 percent this month, tracking other Asian currencies such as Indonesia’s rupiah, which declined 2.6 percent, and the Philippine peso, down 2.4 percent. The local benchmark stock index fell the most in three years. “The Taiwan dollar is going down, although its recent performance is less than some of the other more volatile currencies,” said Nizam Idris, currency strategist at UBS AG in Singapore. “There’s indiscriminate selling as people scramble to save their positions.” The currency fell 0.4 percent to NT$33.128 against the U.S. dollar as of 5 p.m., according to Taipei Forex Inc. It last fell more on Jan. 4. Central Bank of China (CBC) said yesterday that it will provide ample market liquidity and that the local currency was relatively stable, amid global market volatility due to worries over U.S. subprime problems.

“The central bank will provide sufficient liquidity,” a senior CBC official told reporters, without elaborating. “Compared to other currencies, the Taiwan dollar is relatively steady,” said the official, reiterating the CBC’s usual comments.

The CBC listed a series of currency movements in a brief statement.

For instance, the Taiwan dollar weakened 0.36 percent on against the U.S. dollar, compared with the Japanese yen’s 0.76 percent rise, and the New Zealand dollar’s 3.58 percent fall, according to the statement.

The Taiwan dollar weakened to a 2-1/2-month low, despite central bank intervention to curb losses after stocks fell sharply and dealers braced for more foreign fund outflows.

The Taiwan dollar had weakened to as low as NT$33.170 to the U.S. dollar, the lowest level since May 28, compared with the previous close of NT$33.010 to the U.S. dollar. The local currency ended at NT$33.128. Taiwan’s markets were in line with a slump in Asian stocks, which headed for their biggest daily fall since the attacks on the United States in September 2001 as escalating fears about a global credit squeeze sapped investor appetite for risky assets.