Taiwan Dollar Declines as Export Orders May Show Record Drop

By Bob Chen

Feb. 24 (Bloomberg) -- Taiwan’s dollar fell on speculation the island’s exports will extend a record slump as the global financial turmoil curbs demand for computer chips, laptops and mobile phones.

The decline in the currency took losses this month to 2.6 percent, following a drop of a similar magnitude in January. A survey from the National Association for Business Economics yesterday said the U.S. recession will be the worst in more than three decades. A report today is forecast to show Taiwan’s export orders fell by the most ever last month, according to a Bloomberg News survey.

“Taiwan’s dollar has been hurt by slowing growth expectations and falling exports,” said Thomas Harr, senior currency strategist at Standard Chartered Plc in Singapore. “It’s one of the economies hit the most by weaker growth. I think the central bank will tolerate a modestly weaker currency as long as it’s gradual and weakening in line with other Asian currencies.”

Taiwan’s dollar traded at NT$34.710 as of 9:53 a.m. local time from NT$34.628 at yesterday’s close, according to Taipei Forex Inc. It weakened as much as 0.5 percent to NT$34.792, after yesterday reaching a five-year low of NT$34.862.

The report on export orders, an indication of shipments in the next one to three months, will show a 38 percent drop in January from a year earlier, economists forecast, following declines of 33 percent in December and 28.5 percent in November. The data are due at 4 p.m. local time.

The government is also set to report industrial production for January at the same time today. Factory output dropped by a record 38 percent, according to a separate Bloomberg survey, after contracting in the previous four months.

To contact the reporters on this story: Bob Chen in Hong Kong at bchen45@bloomberg.net.