NT dollar surges thanks to foreign share buying

The New Taiwan dollar had its highest close in 18 months after net stock purchases by overseas investors on Tuesday rose to the highest in two weeks.

Fund managers abroad purchased a net NT$11 billion (US$331.8 million) of equities, the most since Jan. 12, according to Bloomberg data. These investors, who bought another NT$7.2 billion of shares yesterday, need to buy the local currency to fund their purchases.

The NT dollar climbed 0.5 percent to NT$33.368 against its US counterpart at 4pm, the strongest close since July 23, 2002, according to Taipei Forex Inc.

"There's been quite a lot of overseas investment into Taiwan's stocks and that definitely has strengthened the Taiwan dollar," said Gary Huang, a currency trader at Union Bank of Taiwan (聯邦銀行) in Taipei.

Taiwan dollar turnover was US$1.6 billion, the highest since June 24, 2002, spurring speculation the central bank sold its currency to slow gains, said Chiou Fu-Nong, a Taipei-based currency trader at Cathay United Bank (國泰世華銀行), a unit of the nation's biggest financial-services provider.

The currency pared gains from as strong as NT$33.271 yesterday.

It trimmed a rally of as much as 0.9 percent to 0.3 percent on June 24, 2002.

The office of central bank Governor Perng Fai-nan (彭淮南) said he couldn't be reached for comment.