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NT$ to fall as exports cool: HSBC, ABN Amro

TAIPEI, Taiwan -- The Taiwan dollar is likely to weaken by the end of the year as overseas sales cool, according to HSBC Holdings Plc. and ABN Amro Bank NV.

The currency in July had its biggest monthly loss against the dollar since January 2007, sliding 0.8 percent, as the government reported the slowest growth in export orders in a year and overseas investors sold more shares than they bought for a second straight month. The government predicts economic growth this year will be the slowest since 2005.

"Taiwan is still a very export-oriented economy and with export growth looking to slow down, it will start impacting the Taiwan dollar," said Perry Kojodjojo, a Hong Kong-based currency strategist at HSBC.

The island's currency registered another decline yesterday, a fifth straight decline, to NT$30.67 per dollar. The benchmark TAIEX index declined for a third day, losing 0.4 percent. Kojodjojo predicts the island's currency will weaken to NT$31 per dollar by the end of the year.

Taiwan's export growth slowed to 17.1 percent in July from 21.3 percent the previous month, according to the median estimate of economists surveyed by Bloomberg News. The government is due to report the figures on Aug. 7. Export orders, indicative of shipments in one to three months, rose 9.3 percent from a year earlier in June after climbing 14.5 percent in May.

"The risk of an export slowdown in Taiwan has heightened," Irene Cheung, a Singapore based strategist at ABN Amro, wrote in a July 30 report. She predicted the Taiwan dollar would reach NT$31.5 to NT$32 per dollar by the end of 2008.

Exports account for about half of Taiwan's economy, which expanded 6.06 percent from a year earlier in the first quarter of this year after 6.5 percent growth in the previous three months, official figures show. Gross domestic product may climb 4.78 percent this year, after increasing 5.72 percent in 2007, the statistics bureau forecast in May.

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