J.P. Morgan Chase & Co recommended investors buy Taiwan's dollar after the currency fell following election dispute.
"The current environment represents a great opportunity for getting long New Taiwan dollars," James Malcolm and Yen Ping Ho, currency analysts at J.P. Morgan in Singapore, wrote in a report.
"The medium-term outlook for local currency appreciation will be largely unaffected by recent political events."
The NT dollar closed at NT$33.285 against the US dollar, unchanged from Monday, when it fell 0.1 percent to its weakest close since March 17, according to Taipei Forex Inc.
Turnover was US$1.035 billion, compared with US$2.793 billion the previous day.
The currency, which fell to NT$33.345 against the greenback at about 9am, rose to as high as NT$33.252 after the ruling party announced its plan to hold a recount and on speculation by traders that the central bank bought the local currency.
"There's still short-term selling pressure on the Taiwan dollar," said Chiou Fu-nong, a currency trader in Taipei at Cathay United Bank (
The nation's economic recovery will attract global investors as domestic political tension eases, the J.P. Morgan report said. The NT dollar may rise to NT$31 by the end of September, and NT$30 by the end of the year, it forecast.
The projection for NT dollar gains by the fourth-largest foreign-exchange trader in the daily US$1.2-trillion currency market according to Euromoney magazine, parallels estimates by Deutsche Bank AG, the third-biggest.
Deutsche is maintaining its NT dollar forecast of NT$32.60 in 12 months, the company's Singapore-based strategist Peter Redward said.
Expectations of quickening economic growth will draw overseas demand for Taiwan's assets.
"The outlook for Taiwan is still very positive, especially for export growth," said Derek Halpenny, a currency strategist at the Bank of Tokyo Mitsubishi Ltd in London. "If you have a positive view of global growth, its pretty much guaranteed we will see a good level of growth in Taiwan."
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