Shares rose slightly yesterday in the highest turnover in more than 20 months on hopes for a traditional rally before the Lunar New Year holidays.
The TAIEX rose 24.67 points, or 0.4 percent, to 6,616.44.
Turnover totaled NT$180.52 billion (US$5.56 billion), the largest daily volume since April 22, 2004, when turnover reached NT$202.41 billion.
Volume on Tuesday totaled NT$153.45 billion.
"The market appeared to have begun consolidating given the fact that more stocks fell than rose, even though the index was higher, and that volume was huge," said Maggie Chien (
Shares in flat panel makers fell sharply yesterday after an uptrend in the final three months of last year on promising flat-screen television sales during the Christmas shopping season.
AU Optronics Corp (友達光電), the world's third-largest liquid-crystal-display panel maker by revenue, fell 4 percent to NT$48, after rising 38 percent since Oct. 19.
Smaller rival Chi Mei Optoelectronics Corp (奇美電子) fell 5.3 percent to NT$45.3 yesterday, after rising 50 percent since Oct. 20.
Meanwhile, the New Taiwan dollar rose on speculation that investors will less likely be drawn to overseas assets after the US Federal Reserve showed in minutes from its Dec. 13 meeting that US monetary policymakers are almost done with lifting rates.
"The Fed could pause rate hikes sooner rather than later, providing support for Asian currencies," said Singapore-based Jimmy Koh, head of treasury research at UOB Group.
"It's the interest-rate spread story. When the Fed starts to halt rate increases, the question is whether the rest of the world will catch up," Koh said.
The NT dollar climbed NT$0.305 to close at NT$32.34 against its US counterpart, its biggest advance since July 22 and the highest close since Aug. 26, according to Taipei Forex Inc.
The local currency also climbed after China on Tuesday said it would use prices from inter-bank trading for the first time to set the yuan's rate starting yesterday, a step toward allowing the markets to decide their own exchange rates.
The yuan traded at 8.0675 against the US dollar from 8.0702 on Dec. 30, according to the Web site of the China Foreign Exchange Trade System in Shanghai.