NT dollar gains on expected greenback harvesting

The New Taiwan dollar gained for the second day yesterday on speculation that exporters will increase conversion of US currency earnings from abroad at the close of the month.

The local currency dropped 0.2 percent this month, boosting the profits that exporters such as BenQ Corp (明基), the nation's largest cellphone maker, can make overseas when they repatriate funds. The currency rose in the final week of six of the past seven months.

"They need to sell US dollars at the end of the month," said Lo Chung, assistant treasury manager at the Chinese Bank (中華銀行) in Taipei.

"If it's early June, they can wait for better levels, but for now, around NT$31.40 is probably the best price that they can sell the US dollar," Lo said.

The NT dollar closed NT$0.031 up at NT$31.330 against the US dollar on the Taipei foreign exchange market.

The currency also rose on speculation that foreign investors will buy stocks before a change in a key index used to assess asset managers' performance. Morgan Stanley Capital International Inc will tomorrow raise the weighting of Taiwanese stocks in its global indexes to 100 percent from 75 percent.

Investors based overseas bought a net US$3.7 billion of Taiwanese shares this month through yesterday, the most since October 2003, according to Taiwan Stock Exchange data.

"Foreign investors may buy stocks until the day of the change, putting appreciation pressure on the currency," said Tetsuo Yoshikoshi, a market analyst at the Singapore treasury unit at Sumitomo Mitsui Banking Corp, a branch of Japan's third-biggest lender.

It may rise to NT$31.25 this week, he said.