The New Taiwan dollar had its biggest gain since May 2001, climbing from a six-week low, on speculation exporters converted overseas earnings before a month-end bookkeeping deadline.
Taiwan's currency has risen 1.2 percent this year, a second quarter of gains, as overseas investors acquired a net US$3.05 billion of shares, based on figures from the stock exchange.
Appreciation
"People expect the Taiwan dollar will appreciate again, so [yesterday's] rates are good levels for the exporters," said Tarcisio Tong, a currency trader at Union Bank of Taiwan (
The NT dollar rose NT$0.254, or 0.8 percent, to NT$31.53 against its US counterpart, according to Taipei Forex Inc. Yesterday's gain is the biggest since May 29, 2001. The currency reached a six-week low of NT$31.90 on Wednesday.
The NT dollar also gained support from stronger regional currencies and a rebound on the local bourse after Wall Street's overnight rally, dealers said.
The US dollar has weakened over the day after US growth figures for the fourth quarter came in unchanged at 3.8 percent whereas some had expected 4 percent.
Employment Figures
The markets are now waiting for the US March employment report due out today to see if this supports expectations that US interest rates will rise faster and further than expected, dealers said.
"The firmer Korean won and equity gains not seen in quite a while combined to drive the Taiwan dollar higher," said a foreign exchange dealer at a leading local bank.
The won climbed 0.8 percent to 1015.5 against the US dollar, according to Seoul Money Brokerage Service Ltd. It has risen 1.9 percent this year and had a third quarterly gain.
The dealer said she suspects some forex dealers may be seizing the opportunity and actually helping to accelerate the pace of NT dollar appreciation.
Intervention?
But she noted that central bank intervention remains in the background as the regulator would not want to see too much volatility in the local currency, especially in an upward direction.
Taiwan's currency slid 1.1 percent in March on concern rising interest rates in the US will prompt some money managers to take funds away from the nation to invest them in US dollar-denominated deposits.
The Federal Reserve on March 22 raised its target for overnight loans between banks to 2.75 percent from 2.5 percent, the seventh increase since June. Taiwan's benchmark interest rate is 1.875 percent after the nation's central bank on March 24 raised it by an eighth of a percentage point at its quarterly policy meeting.
"Taiwan's economy and its outlook remain sound. Foreign investors will resume purchases of the island's stocks, helping the Taiwan dollar," said Ichiro Ikeda, vice president of the global currency and commodity group at JPMorgan Chase Bank in Tokyo.
The bank expects the currency to strengthen to NT$29.5 by the end of June, he said.
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