The Taiwan dollar fell to its lowest level in nearly two months on Monday due to foreign fund outflows after a sharp drop in stocks and as importers bought US dollars, although the central bank helped to limit the local currency's decline.
The Taiwan dollar fell to as low as T$32.498 to the US dollar, the weakest level since October 26, when the intraday trough was at T$32.526. The local currency ended weaker at T$32.481 from its previous close of T$32.376.
"Foreign institutions, NDFs (non-deliverable forwards) and importers - everybody was buying US dollars. However, the central bank did enter the market to smooth out any big swings," said a dealer in Taipei.
The Taiwan dollar has lost about 0.66 percent since the beginning of December as a fall in Taiwan's stock market dampened sentiment and resulted in foreign fund outflows.
However, it is still up 0.35 percent since the start of 2007, partly because of the Taiwan central bank's measures to ensure the Taiwan dollar firmed gradually to curb inflationary pressures and prevent brisk capital outflows. Dealers said the central bank and exporters sold some US dollars during the session, which capped the Taiwan dollar's losses. Volume on the main Taipei Forex Inc was US $968 million, lower than an active US $1.014 billion on Friday.