Fuel prices could rise on weaker New Tai­wan dol­lar

The China Post - - LOCAL -

Fuel prices in Tai­wan are ex­pected to move higher next week as a fall­ing New Tai­wan dol­lar off­sets the ef­fects of a drop in in­ter­na­tional crude oil prices, mar­ket sources said Satur­day.

State-owned CPC Corp. Tai­wan ( ) is likely to an­nounce a NT$0.1 (US$0.006) per liter hike in the prices of ga­so­line and diesel af­ter a drop of NT$0.8 per liter ear­lier this week. The ex­pected hike will break a three­week los­ing streak for do­mes­tic fuel prices.

The CPC cal­cu­lates its fuel prices based on a weighted oil price for­mula, which is com­prised of 70 per­cent Dubai crude and 30 per­cent Brent crude.

In­ter­na­tional crude

oil

prices trended lower dur­ing most of this week due to an in­crease in oil in­ven­to­ries in the mar­ket. But the ben­e­fits of the lower in­ter­na­tional crude prices have been eroded by the weak­ness of the New Tai­wan dol­lar this week.

Crude prices for Septem­ber de­liv­ery in New York closed up 0.6 per­cent at US$42.50 per bar­rel overnight on a re­bound. But for the en­tire week, U.S. crude still fell more than 3 per­cent. In Lon­don, Brent crude prices closed up al­most 1 per­cent for the week.

Since Tues­day, the New Tai­wan dol­lar has recorded deep dep­re­ca­tion against the U.S. dol­lar for three trad­ing ses­sions in a row as the lo­cal cur­rency fol­lowed the Chi­nese yuan’s down­turn to move lower.

The weak­ness of the yuan re­sulted from a move by the Peo­ple’s Bank of China (PBOC) to cut the Chi­nese yuan’s ref­er­ence rate sharply, lead­ing the yuan to weaken in a bid to boost the coun­try’s ex­ports and lift the eco­nomic growth.

On the back of the close busi­ness ties with China, the New Tai­wan dol­lar also fell sharply against the U.S. dol­lar, while in­ter­ven­tion by Tai­wan’s cen­tral bank to prop up the U.S. dol­lar dealt another blow to the lo­cal cur­rency. On Fri­day, the New Tai­wan dol­lar con­tin­ued a down­trend due to the cen­tral bank’s in­ter­ven­tion de­spite a re­bound staged by the yuan.

This week, the New Tai­wan dol­lar fell al­most 1.9 per­cent against the green­back, which has made im­port- ed com­modi­ties, like crude oil, more ex­pen­sive.

Although the av­er­age price of a bar­rel of crude un­der CPC’s weekly float­ing price for­mula stood at US$49.32 as of Aug. 14, down from US$49.83 seen in the pre­vi­ous week, the state-owned oil com­pany could still raise fuel prices next week, the sources said.

If the price re­duc­tions are im­ple­mented next week as ex­pected, prices at the pump will rise to NT$21.3 per liter for su­per diesel, NT$23.4 per liter for 92 oc­tane un­leaded ga­so­line, NT$24.9 per liter for 95 oc­tane un­leaded ga­so­line and NT$26.9 per liter for 98 oc­tane un­leaded ga­so­line. The CPC is sched­uled to an­nounce the weekly price ad­just­ments Sun­day noon.

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