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Appreciation of the New Taiwan dollar `inevitable'

In light of a weakening US greenback, a further appreciation of New Taiwan dollar against the greenback is inevitable, Wu Rong-i (吳榮義), president of the Taiwan Institute of Economic Research (TIER, 台經院), said yesterday.

"The NT dollar may continue to climb to an average of NT$33.05 against its US counterpart this year," Wu said.

While the nation's central bank is expected to intervene in the forex market to slow gains, the NT dollar's appreciation will be "unstoppable," he added.

The US dollar's depreciation, the Japanese yen's appreciation and the expected appreciation of the Chinese yuan will increase the pressure for the NT dollar to rise, Wu said.

Moreover, foreign investors -- in anticipation of the NT dollar's appreciation -- have bought NT$100 billion this month, he said.

According to Wu, foreign investors injected NT$500 billion last year into the Taiwanese stock market.

The NT dollar Thursday closed at NT$33.388, down NT$0.020 from yesterday's NT$33.368 on the Taipei foreign exchange market. Turnover was US$1 billion, also down from the previous day's US$1.6 billion, the highest since June 24, 2002.

The NT dollar yesterday opened at NT$33.420 and gradually moved to NT$33.327 against the greenback during the session, before heading back to NT$33.388 after the US Federal Reserve signaled that its commitment to hold interest rates down had weakened.

Fed policy makers said they would be "patient" in keeping down borrowing costs, a shift from their previous vow to maintain rates for a "considerable period."

Traders said the Fed's remark fueled market speculation that a possible rate increase in coming months will boost demand for the US currency.
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