By Bob Chen and Yu-huay Sun, Bloomberg
TAIPEI, Taiwan — Taiwan’s dollar had the biggest weekly loss in 10 years after a government report Thursday showed the island’s export outlook worsened more than economists expected. The currency touched a three-year low after the Ministry of Economic Affairs said export orders grew at the slowest pace in six years in September as demand from the U.S. and China cooled. The central bank sold about US$500 million of U.S. dollars Thursday to help slow the local currency’s decline, the Commercial Times reported yesterday, citing traders it didn’t name.
“Taiwan is very exposed to the rest of the world,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. in Sydney. “Obviously the central bank is slowing the move somewhat but it’s a contagion.”
The currency slumped 2.6 percent this week to NT$33.412 against the U.S. dollar at the 4 p.m. close, the biggest five- day loss since the period ended Jan. 10, 1998, according to Taipei Forex Inc. It dropped as much as 0.5 percent yesterday to NT$33.463, the weakest since December 2005. The Central Bank of the Republic of China (Taiwan) was not aiming to stop the local currency from weakening altogether, as it is seeking to increase the competitiveness of local exporters, the Taipei-based newspaper said.
Export orders, an indicator of actual shipments over the next one to three months, rose 2.82 percent from a year earlier, following a 5.38 percent gain in August, the Ministry of Economic Affairs said yesterday after local markets closed. That was the smallest increase since March 2002.