Sat, Dec 18, 2004 - Page 11 News List

Taiwan, Singapore dollar, Thailand's baht advance

ELECTION DIVIDEND Analysts attributed the rise in the Taiwan dollar to investor sentiment that the pan-blue camp's election victory will reduce tensions with China

The New Taiwan dollar had its first weekly gain in three after investors abroad yesterday spent the most on the nation's stocks in a month, igniting speculation they will buy the currency to pay for their purchases.

Overseas funds were net buyers of stocks this week as opposition parties secured control of the legislature in elections.

The result eased concern that President Chen Shui-bian (陳水扁) would garner support for a pro-independence stance that has antagonized China.

"The NT dollar this week has been mostly supported by stock inflows," said Gary Huang, a currency trader in Taipei at Union Bank of Taiwan (聯邦銀行). "Foreigners' net stock sales seemed to have eased," suggesting their purchases will increase.

The currency rose NT$0.02 to close at NT$32.360 against the US dollar on the Taipei foreign exchange market. It has climbed 5 percent this year, the third-best performer among 15 Asia-Pacific currencies tracked by Bloomberg, after South Korea's won and the New Zealand dollar.

International money managers yesterday bought a net NT$7 billion (US$216 million) of Taiwan's shares, the most since Nov. 18, according to stock exchange figures. Net equity purchases this week were NT$16.2 billion after net sales last week.

"The opposition party's victory helped reduce Taiwan's political tension with China," Huang said.

The won this week rose 0.7 percent to 1,060 against the dollar, according to Seoul Money Brokerage Services Ltd. It soared 12 percent this year, the best performer among 15 Asia-Pacific currencies tracked by Bloomberg.

The Singapore dollar this week rose 0.8 percent to S$1.6482, and India's rupee traded 1.6 percent higher at 44.016 two hours before the close. The Philippine peso gained 0.2 percent to 56.22, according to the Bankers Association of the Philippines. Thailand's baht advanced 1.3 percent to 39.31 as the central bank on Wednesday unexpectedly raised interest rates a quarter percentage point to 2 percent.

Asian currencies also gained as overseas fund managers bought stocks in the region. They yesterday purchased a net US$203 million of South Korea's equities, the highest since Sept. 9, according to stock exchange figures. In Thailand, they bought a net 2.5 billion baht (US$64 million), the most since Dec. 2.

"Asian asset markets in general will attract a lot of attention over the next couple of months," said Simon Flint, a senior currency strategist at Bank of America Corp in Singapore. "We have to be dollar bearish going into the first quarter."

Some investors may put money in the region before a possible change to China's currency peg, Flint said. A stronger yuan may boost the country's buying power in Asia and make exports less competitive, allowing other nations to let their currencies rise.

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