The New Taiwan dollar had its biggest advance in seven weeks as traders bet the central bank would be more inclined to let its currency gain after the yen rose for a fifth day in New York.
A stronger yen may reduce pressure on Taiwan's central bank to depreciate its currency to help exporters. The NT dollar failed to react to China's reaction on President Chen Shui-bian's (
"China's reaction isn't very surprising and within expectations, so it didn't adversely affect the Taiwan dollar," said Matt Lin, a foreign-exchange analyst at Hua Nan Commercial Bank (華南銀行). "The central bank probably won't sell the Taiwan dollar unless there's a lot of volatility."
The NT dollar rose NT$0.172 to close at NT$32.283 against its US counterpart on the Taipei Forex Inc. Yesterday's gains were the largest since Jan. 12. Financial markets in Taiwan were closed on Tuesday for a national holiday.
The NT dollar may rise to NT$32.20 this week, Lin said.
Meanwhile, China's currency rose to the highest level since last year's revaluation as US Treasury Undersecretary Tim Adams called on Beijing to allow the yuan to trade more freely.
"We think greater flexibility is in the best interests of China," Adams told reporters in Tokyo yesterday. "It would be a positive development for China's economy."
The yuan strengthened past 8.04 to the US dollar for the first time since the 2.1 percent revaluation on July 21, when the central bank said the yuan would be able to move 0.3 percent either side of a daily fixing rate. Gains have been less than 0.1 percent since.
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