Wed, May 19, 2004 - Page 11 News List

NT dollar erases losses

EQUITIES REBOUND A rising yen helps Taiwan's producers as the Finance Ministry eases regulations for foreign investment to allow same-day financing

BLOOMBERG AND AFP , TAIPEI

The New Taiwan dollar erased earlier losses as stocks rose and a gaining yen helped boost the competitiveness of the country's products against rival goods from Japan.

Equities rebounded after the benchmark TAIEX yesterday fell to a nine-month low and the government decided to ease access for overseas institutional investors to the market. The yen had its biggest gain in a week against the dollar as a report showed Japan's first-quarter economic growth was faster than expected.

"The NT dollar gained after Taiwanese stocks rebounded and the yen rose above 114" to the dollar, said Lin Kuen-liang, a currency trader at Shanghai Commercial and Savings Bank.

The NT dollar rose NT$0.03 to close at NT$33.683 on the Taipei foreign exchange market yesterday on a turnover of US$594 million.

A gaining yen raised the cost of Japanese goods for consumers abroad, boosting demand for rival products from Taiwan and helping to push the island's currency higher.

The yen and NT dollar have had a correlation of 0.926 this month, according to Bloomberg data. A value of 1 would mean they moved in tandem.

The Ministry of Finance yesterday eased regulations for foreign investors, including allowing local banks to provide same-day financing for trading and overseas institutions to remit money abroad from the sale of borrowed shares.

Foreign investors would be permitted to remit abroad capital gains from short sales, the ministry said, adding that the new measure was part of the government's efforts to internationalize domestic markets.

The changes would also relax foreign-investor trading in futures markets and give them permission to purchase "call" options and sell "put" options.

In addition, they would no longer need approval from the central bank's foreign exchange department for investment in the domestic stock market, the ministry said.

Premier Yu Shyi-kun has ordered the measures to take effect within two months.

The changes come after foreign investors ditched stocks on the Taiwan Stock Exchange 15 days in a row, selling at least NT$100 billion (US$2.97 billion) over that period and leading prices to a nine-month low on Monday.

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