Sat, Jan 01, 2005 - Page 10 News List

NT dollar continues rally against its US counterpart

STAFF WRITER , WITH BLOOMBERG

The New Taiwan dollar extended its four-year high against its US counterpart as demand for stocks helped the local currency achieve a yearly gain against the greenback.

The NT dollar rallied as overseas investors bought a net US$9.2 billion worth of stocks in Taiwan last year.

The currency also advanced on speculation the nation's central bank will be more willing to accept currency gains in the year ahead as a way to curb inflation while economies expand.

The central bank on Thursday raised its benchmark interest rate for the second straight quarter by 0.125 percentage points. The bank on Sept. 30 raised its rediscount rate by 0.25 percentage points, the first increase in four years.

Central bank Governor Perng Fai-nan (彭淮南) said after the bank's quarterly policy meeting on Thursday that it hopes to gradually raise its interest rate to a more "normal level."

The NT dollar opened at NT$31.978 and jumped more than NT$0.228 to NT$31.75 against the US dollar before noon on the Taipei foreign exchange market. At the close, the currency rose NT$0.061 to NT$31.917, the highest close since Oct. 12, 2000. A total of US$1.189 billion changed hands, compared with US$738 million in the previous day.

"A rate increase by the central bank is in part helping the NT dollar," said Gary Huang, a currency trader in Taipei at Union Bank of Taiwan (聯邦銀行). The local currency may rise to NT$31 against the US currency by the end of March, he said.

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