The New Taiwan dollar fell to its lowest level against the greenback in nearly three months after risk-adverse foreign investors moved funds out of the local markets.
The NT dollar weakened as the local bourse fell 173 points May 17, with net sales from mainland Chinese and other foreign institutional investors reaching NT$10.17 billion.
Taiwan’s currency declined to 32.1 per U.S. dollar May 17, down 0.79 percent from the day before, the lowest level since Feb. 26.
According to local currency market dealers, Asian currencies have been moving sideways amid fallout from the European credit crisis. The Singapore dollar, South Korean won and Thai baht all went down along with the NT dollar May 17.
“With exports to Europe by local electronics manufacturers on the rise, there is increasing NT dollar-euro correlation,” the dealers said. “A depreciating NT dollar is a way out for local businesses with high euro holdings.”
Despite the volatility in the currency trading market, there has been no major change in non-deliverable forwards. The current discount rate for one-month NDFs stands at NT$0.09, which reflects a positive outlook for the local currency by institutional investors.
On the global front, the euro continued to slump, ending at around US$1.23, the lowest level since April 2006. Other euro rates for May 17 include 113.86 Japanese yen and 1,154.80 South Korean won. (SFC-JSM)