NT dollar continues to rise against the greenback

The New Taiwan dollar yesterday continued to rise against its US counterpart, closing up NT$0.185 at NT$32.890 on the Taipei foreign exchange market.

The close marked the NT's highest level in the last seven months. The local currency's high against the greenback this year was NT$32.75 in April.

"The momentum [of the strengthening NT dollar] is expected to continue to the end of this year amid the international climate of the weakening US dollar," said Yang Kung-yi (楊恭逸), a trader at Shanghai Commercial & Savings Bank (上海銀行) in Taipei. "[There's] no sign of a recovering US dollar in sight yet."

Turnover was US$860 million yesterday, down from US$1.29 billion last Friday, according to the foreign exchange market in Taipei. But traders said the local currency may continue to gain ground amid a steady inflow of foreign capital to purchase Taiwan stocks.

The greenback has been weakening against the world's major currencies since the end of the US presidential election last week, driven by increasing concerns about how the US will deal with its worsening trade and budget deficits.

Yang did not expect any intervention from the nation's central bank to curb the appreciation of NT dollar for the time being, "as the bank would like a stronger currency to ease the nation's inflationary pressure," he said.

In response, a central bank official said it was not appropriate for him to make comments, but he stressed that the bank's policy is to respect the market mechanism.

"We respect the market's supply and demand mechanism to maintain a dynamic stability in the foreign exchange rate," George Chou (周阿定), the bank's foreign-exchange chief, told the Taipei Times.

Amid worries the strengthening NT dollar may dampen exports, Minister of Economic Affairs Ho Mei-yueh (何美玥) said earlier yesterday that the recent appreciation has not yet had a "fatal impact" on Taiwan's foreign trade.

"The extent of the impact will depend on how much the currency of a specific competing country has appreciated," the Chinese-language press quoted Ho as saying.

"If its currency appreciation range is similar to our currency's appreciation range against the greenback, the impact will be limited," she added.

Wu Rong-I (吳榮義), president of the Taiwan Institute of Economic Research (台經院) expects the NT dollar to appreciate at a slow pace in the months to come.

The NT dollar may trade at NT$32.67 versus the US dollar on average next year, rising from NT$33.57 on average this year, Wu said at another presentation in Taipei.