NT dollar may gain against greenback

The New Taiwan dollar is expected to gain in value against the US dollar this year as the greenback loses its momentum amid an influx of foreign capital to cash in on a bullish stock market, banking sources said Thursday.

The sources predicted that the local currency is very likely to rise to NT$33.0 against the US dollar over the course of the year, but they pointed out that central bank's policy will be the key to deciding the domestic currency's cause.

The NT dollar is expected to appreciate to NT$33.0 against the US dollar in the first half of this year as long as the domestic bourse continues to remain sound and foreign capital continues to enter the country, according to the sources.

However, they also said that the central bank will interfere if there is a large influx of foreign capital in the form of speculation on the domestic currency's appreciation.

On the grounds that Taiwan's economy and the domestic stock market will continue to regain momentum amid an improved business climate, they forecast that foreign capital will continue to flock in, possibly pushing up the local currency to break the NT$33 level against the greenback.

During the first 11 months of last year, a record high of US$22.3 billion-worth of foreign capital was channeled into Taiwan.

The NT dollar finished a day earlier at NT$33.978 against the greenback, an appreciation of about 2.2 percent in comparison with NT$34.753 at the end of 2002.