The New Taiwan dollar closed down NT$0.001 at NT$31.995 against the US dollar on the Taipei foreign exchange market yesterday, but dealers predicted that the local currency would continue to appreciate against the US dollar for the next three months.
Following the G7's calls over the weekend for China to revalue its currency, the NT dollar closed at NT$31.992 on Monday, the highest level for nearly three months.
The currency had firmed to as high as NT$31.86 in the morning session before weakening after the central bank intervened.
A strengthening local currency could make Taiwanese exports more expensive than their Asian competitors, something the nation's policy makers, including the central bank, would like to avoid.
The NT dollar continued its rise against the US dollar in line with the Japanese yen and the South Korean won in the morning session.
But the currency's rise ended after the South Korean government intervened when the won broke 940 against the greenback and Japanese Finance Minister Sadakazu Tanigaki warned against sudden moves in the currency, said Yang Kung-yi (
"Taiwan's central bank also stepped in to stop the NT dollar from strengthening, albeit in a less aggressive and less obvious manner," Yang said.
Turnover was US$1.429 billion on the Taipei foreign exchange market, up from US$1.388 billion on Monday. On the smaller Yuantai foreign exchange market, turnover remained unchanged at US$662 million.
Yang predicted that the NT dollar would consolidate in the short term.
Yang also said there are higher chances that it break the NT$31.80 mark within one month and reach between NT$31.5 and NT$31.8 per US dollar in the next three months.
These just reflect the greenback’s weakening trend and potential appreciation in the Chinese yuan, he added.
So far this year, the NT dollar has advanced more than 2.5 percent against the US dollar, according to the central bank’s Web site.
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