Sat, Nov 13, 2004 - Page 11 News List

NT dollar rises for seventh week


New Taiwan dollar is headed for a seventh weekly gain against the US currency on speculation foreign investors will buy the nation's stocks.

The currency lured buyers as overseas investors bought a net NT$23.4 billion (US$709.2 million) of Taiwanese stocks from Monday to Thursday.

"Speculation there will be constant capital inflows to Taiwan's stock markets supports the NT dollar, providing it more room for a gain going forward," said Noriyoshi Tsunoda, assistant general manager of the treasury department in Taipei at Mizuho Corporate Bank Ltd, a unit of Japan's biggest lender.

The NT dollar rose NT$0.101, or 0.3 percent, to close at NT$32.99 on the Taipei foreign exchange market. The currency may strengthen to about NT$32.5 against the greenback by the end of the year, partly because a key index will add more of the nation's stocks, Tsunoda said.

Morgan Stanley Capital International Inc in June said it will give Taiwan's stocks full representation in its global indexes. Taiwanese companies have about 55 percent of their market value represented in the indexes. MSCI said it will increase the figure to 75 percent on Nov. 30 and to 100 percent on May 31.

The change may lure global investors who track the index to the nation's stocks.

The local currency also drew support from speculation China will accelerate its efforts to let the yuan trade more freely.

China may let the yuan fluctuate more freely against the US dollar "in the near future," before switching to a peg against a basket of currencies, Cheng Siwei (程思危), vice chairman of the National People's Congress, said on Thursday.

Cheng said he was speaking as an academic rather than an official.

"Speculation about the Chinese currency has also been an underlying supportive factor for the Asian currencies, including the NT dollar," Tsunoda said.

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