Taiwan stocks are likely to stay firm in the week ahead if the Japanese yen and the New Taiwan dollar stabilize, analysts said Friday.
"Foreign institutional buying has been cautious in the past week because of the Taiwan dollar's steep fall against the US dollar triggered by the yen's weakness," said Capital Securities Corp (
"So once the New Taiwan dollar gains support from a stabilizing yen, we expect to see more interest from foreign institutions, which are generally optimistic about the market's outlook," he said.
But there would be pressure at 5,600 points in the near term, he said.
The yen's fall has sent the New Taiwan dollar to its lowest level in 15 years, dropping 0.5 percent over the week to close at 35.084 against the greenback on Friday.
"There's not much room for the currency to depreciate further," said a dealer at a local bank, who anticipated support at 35.30 in the short term.
In spite of the currency's weakness, the Taiwan stock index soared 289.04 points or 5.7 percent over the week to close at 5,398.28 on Friday prompted by gains on Wall Street and institutional year-end window-dressing.
Dresdner RCM Global Investors Securities Investment Consulting Co analyst Gary Chu, however, said the market was unlikely to sustain the current upturn as pressure from profit-taking had increased after recent gains.
"We expect the market to consolidate for a while before a fresh round of buying interest surfaces after the Lunar New Year [in mid-February]," Chu said.
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