Taiwan’s central bank intervened to weaken its currency, according to traders, as the yen’s drop to a 12-year low threatened the island’s exports.
Taiwan’s dollar fell 0.3 percent in the minute before the noon trading break on intervention, said two traders who asked not to be identified because they’re not authorized to speak publicly. It rallied before declining 0.6 percent in the last 49 minutes of trading to close 0.3 percent weaker from Wednesday at NT$30.801 a dollar, Taipei Forex Inc. prices show. The currency fell 0.8 percent this week, compared with drops of 1.9 percent in the yen and 1.5 percent for the won.
The three currencies often move in tandem as the nations’ exporters compete in international markets. Foreign funds have pumped $8.9 billion into Taiwanese stocks this year and driven a 3.5 percent gain in the island’s dollar, the best performance in Asia. By contrast, the won and yen have weakened amid signs the U.S. is moving closer to raising interest rates. Taiwanese exports have fallen in each of the last three months.
“The Taiwan dollar’s gains have caused foreign-currency losses and weaker competitiveness in terms of export prices,” said Andrew Tsai, an economist at KGI Securities Co. in Taipei. “So the central bank doesn’t want the currency to rise that quickly.”
The authority took the rare step of weakening the exchange rate before the midday trading break on April 30, two traders who asked not to be identified said the same day. While the central bank routinely intervenes in the run-up to the close, the currency started falling earlier than usual on Thursday at 3:11 p.m., compared with around 3:30 p.m on most days.
Harry Yen, director-general at the central bank’s foreign-exchange department, couldn’t be reached for comment following four telephone calls to his office.