The Taiwan dollar weakened on Monday to a one-month closing low on importer deals and fund outflows and as interbank dealers sold the local currency to cover their short positions on the greenback. The Taiwan dollar closed at an intraday low of T$32.940, its weakest level since May 18, and lower than Friday's close of T$32.800.
Volume on the main Taipei Forex Inc exchange was thin at $973 million, in line with the average level on most trading days, and higher than Friday's $573 million. "There're some signs that the US dollar is strengthening, so we're seeing some investors trying to cover their short position there," said a dealer in Taipei. "Foreign funds are pulling some of their money out, while importer deals are further pressuring it." Taiwan stocks posted their worst daily drop in two months on Monday, with foreign investors selling a net total of T$2.63 billion ($79.8 million) worth of shares.
Movement on the offshore non-deliverable forwards market (NDF) also pressured the Taiwan dollar. Six-month NDFs were quoted at -0.535/-0.500 compared to Friday's close of -0.680/-0.660, indicating investors expect the local currency to strengthen less strongly than previously expected. Dealers said they expect the Taiwan dollar to find support at around the T$33.200 level, as the current slump on the local equities market weighs on sentiment and raises expectations of further fund outflows.
"In the short term, we should find support at around T$33.200, but in the medium to long term, I think T$32.500 is a reasonable level for the Taiwan dollar," said another dealer. On the smaller Cosmos exchange, the Taiwan dollar closed at T$32.937, weaker than Friday's close of T$32.785.
Comments
Comments are closed.