NT dollar plummets most in five years

The China Post news staff and Bloomberg

TAIPEI, Taiwan — It was a nerve-wrecking and frustrating day on both Taiwan’s currency and stock markets, as the NT fell the most in five years, and stocks declined 2.7 percent, on concerns the current financial crisis may get worse. The NT dropped 0.9 percent — the biggest single-day margin in five years — and broke the NT$33 level as a government report yesterday showed export orders rose last month at the slowest pace in more than six years. Making matters worse, Premier Liu Chao-shiuan on Wednesday said his government will lower its 2009 economic growth forecast from 5.08 percent, without giving a new figure.

The Taiwan dollar was dropping “because of the potential slump in the semiconductor industry and the fact that the Korean won has depreciated a lot,” said Irene Cheung, a corporate director for local-markets trading at ABN Amro Bank NV in Singapore. “As a big competitor in this industry, there is a need to catch up.”

The currency weakened as much as 1.3 percent to NT$33.408 against the U.S. dollar, the lowest level since May 2007, before trading at NT$33.29, according to Taipei Forex Inc. Responding to this, the central bank had only one thing to say, a statement it made for two consecutive days — “Taiwan’s dollar is relatively stable.” South Korea’s won and Singapore’s dollar posted steeper declines this year, the Central Bank of the Republic of China (Taiwan) said in a faxed statement yesterday. The island’s currency has slipped 2.6 percent since the end of last year, compared with the won’s 34 percent drop and the Singapore dollar’s 4.4 percent decline.

The TAIEX, meanwhile, lost 132.08 points, or 2.7 percent, to 4,730.51 at the close of trade in Taipei, the lowest since June 2003. Regulators have halved the limit a stock is permitted to decline to 3.5 percent until today, and will announce before next Monday whether the limit will be extended. Cathay Financial Holding Co., Taiwan’s largest listed financial company, lost NT$1.2, or its 3.5 percent daily limit, to NT$33.6 and Fubon Financial Holding Co., the second largest, lost 65 cents, or 3.3 percent, to NT$19. Taiwan’s financial regulator said it will help investors settle disputes and seek compensation for losses related to the purchase of products linked to Lehman Brothers Holdings Inc.

Inotera Memories Inc. dropped 32 cents, or 3.5 percent, to NT$8.92 after Taiwan’s third-largest memory-chip maker reported a third-quarter loss of NT$4.1 billion, compared with an NT$443 million profit a year earlier, amid a growing glut in memory chips.

Jih Sun Financial Holdings Co. climbed its daily limit for a third day, rising 19 cents, or 6.7 percent, to NT$3.03, after the Commercial Times reported that Fubon Financial plans to acquire Jih Sun. Both companies declined to comment yesterday.

Nanya Technology Corp. dropped 23 cents, or 3.4 percent, to NT$6.6 after Taiwan’s second-biggest computer memory chipmaker posted its sixth straight quarterly loss, wider than estimates, after a glut pushed prices down.