07.10.2001
NT dollar heading towards NT$35.0/US$1

• Development: The NT dollar closed at NT$34.55/US$1, finally breaking the NT$34.5 level yesterday on turnover of US$511m. It is reported that the Central Bank (CBC) accounted for over 90% of the turnover, defending the currency’s slide.

• Analysis: With fiscal spending constrained by the government’s budget deficit and interest rate cuts unable to filter through to the economy, a weaker currency is the government’s best bet.

• Primasia View: We expect a further weakening of the currency, under CBC supervision to NT$35.0, however, falling interest rates in the US should cap the fall. The government will release June export figures today. We forecast a 21% YoY fall.

IrmakSurenkok@Primasia.com +886-[0]2-2547-8873