The New Taiwan dollar yesterday moved higher against its US counterpart amid exporters' continued demand for the local currency to pay year-end bonuses, as well as foreign fund inflows, following strong gains the previous day.
The NT dollar also rose after local newspapers cited central bank Governor Perng Fai-nan (
The NT dollar rose NT$0.324 to close at NT$32.016, its largest gain since May 29, 2001, and the highest close since Aug. 16, according to Taipei Forex Inc. The local currency opened at the day's low of NT$32.340 and hit a high of NT$32.000 during the session.
The NT dollar has chalked up a 1.93 percent rise against its US counterpart in the past two days and more than NT$1 for the last 20 trading sessions.
"The Taiwan dollar's move followed the international trend," newspapers such as the Chinese-language Economic Daily News and Commercial Times yesterday reported Perng as saying. There was no elaboration of Perng's statement in any of the reports.
The governor's comment, which was later denied in a statement, raised speculation that the NT dollar would be allowed to strengthen along with other Asian currencies.
"Taiwan is going to be more accepting of some appreciation in the Taiwan dollar because we've had a succession of pretty good numbers in the economy," said Simon Flint, head of emerging Asia currency strategy at Merrill Lynch & Co in Singapore.
While exporters' demand for the NT dollar was strong yesterday, foreign fund inflows remained active and gave a firm support to the local currency, dealers said.
Overseas investors yesterday bought a net NT$7.07 billion worth of Taiwanese equities, according to the Taiwan Stock Exchange's statistics.
Foreign investors purchased a net of NT$14.18 billion in local stocks the previous day, according to the Taiwan Stock Exchange.
"The improving stock-market environment as people start to price in the end of Fed tightening has positive effects on Asia," Flint said. "Lower interest rates are positive for stock markets and they diminish the importance of relative yields."
US Federal Reserve minutes from its Dec. 13 policy meeting released on Jan. 3 showed US policymakers may be almost finished raising rates.
Asian currencies such as the NT dollar, yen and Singapore dollar fell against the US dollar last year, partly as the Fed lifted its key rate 13 consecutive times since June 2004 to 4.25 percent on Dec. 13 last year.