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Taiwan dollar drops sharply to hit 3-month low

TAIPEI, Taiwan - The Taiwan dollar fell to a three-month low against the US currency Friday, a move that could help reverse a downturn of the island's electronics exports.

On Friday, the US dollar was at NT$31.09, up from NT$30.87 the previous day. The local currency has fallen 2.3 percent over the past two weeks as the US dollar was gaining strength.

Analysts said the island's central bank did not move to stem the local currency's decline, apparently hoping its fall could help bolster Taiwan's exports. The weaker local currency will make Taiwanese exports less expensive.

On Thursday, the Finance Ministry reported a trade deficit of US$410 million in July, attributed to soaring oil prices and the global economic downturn. It was the first monthly trade deficit recorded by Taiwan since Feb. 2006.

The island's exports grew only 8 percent to US$22.8 billion in July, the first single-digit growth recorded this year. During the period, exports to China grew only 4 percent, down from 25.5 percent in June.

On Friday, the main Taiwan stock index rose 2.63 percent as computer and electronics shares were spurred by the weaker local currency.

The Taiwan dollar's fall also came as inflationary pressure is expected to ease following recent oil and commodities prices declines from peaks hit earlier in the year.

Taiwan's inflation reached a 14-year high of 5.92 percent in July.