The New Taiwan dollar rose to a nine-month high yesterday amid continued foreign fund inflows and expectations that US rate rises might end soon, traders said.
In yesterday's session, the local currency touched NT$31.755 to one US dollar, the highest since July 26 last year, before it pulled back to close at NT$31.786 on the Taipei foreign exchange market. Turnover was US$1.027 billion.
The NT dollar closed at NT$31.913 on Friday. Financial markets were closed on Monday for a public holiday.
"The NT dollar's strong appreciation today reflected the greenback's weakening trend," Yang Kung-yi (
It became apparent that the central bank was intervening in the market when the NT dollar broke the NT$31.8 mark in the morning session, he said, adding that the bank's move was made to stop the widening of businesses' exchange rate losses.
"A strengthening NT dollar is unfavorable to the nation's exporters," Yang said.
The currency extended last week's biggest advance in more than three months as overseas investors bought more shares than they sold for 25 days through yesterday, according to stock exchange data.
Yang expects the NT dollar will continue to move toward NT$31.5 per US dollar in the short term. But how soon it will achieve that price depends on the central bank's attitude, he said.
But the NT dollar's appreciation was mainly due to ``psychological'' expectations as supply and demand for the local currency was steady, a newspaper quoted central bank Governor Perng Fai-nan (
He was quoted by the Chinese-language Economic Daily News as saying that Taiwan's foreign exchange reserves have risen a little over the past 15 months as hot, speculative money entering Taiwan was roughly offset by residents' capital outflows.
Supply and demand in the foreign exchange market was roughly stable, judging from fundamentals, and the NT dollar's rise was due to market expectations that it might strengthen further on capital inflows from abroad into Taiwan's stock markets and the gain in the yen, Perng said.
The nation's foreign exchange reserves, the third-highest in the world, amounted to US$257.051 billion in March, according to the central bank's statistics.