Thu, May 18, 2006 - Page 12 News List

NT dollar rises against greenback

GOING DOWN The US dollar fell to its lowest level against the Japanese yen for almost 12 months yesterday and was generally lower against other Asian currencies

By Jackie Lin  /  STAFF REPORTER , WITH AGENCIES

The New Taiwan dollar rose substantially against its US counterpart yesterday, after the US dollar sank to its lowest level against the Japanese yen for almost a year as latest US economic data reinforced expectations that the Fed will soon stop raising lending rates.

Traders were waiting for last month's US consumer price index later yesterday for further clues on the health of the US economy.

Currency players were also due to closely monitor US Treasury Secretary John Snow's congressional testimony later yesterday on the Treasury's recent foreign exchange report.

The NT dollar rose NT$0.246 to close at 31.574 per US dollar on the Taipei foreign exchange market. The local currency opened at 31.82 per US dollar and rose to as high as 31.564 in yesterday's session.

Ivy Lee (李恆思), a senior trader at The Shanghai Commercial & Savings Bank (上海商銀), said the NT dollar's appreciation yesterday was driven by the strong gains of the Japanese yen and Korean won.

The US dollar fell to ?109.02 -- its lowest level since June last year -- before recovering to close at ?109.17 on the Tokyo foreign exchange market yesterday, down ?0.55 from late yesterday in New York.

The greenback also fell to 937 South Korean won from 945.6 the previous day.

"The NT dollar still has revaluation opportunities as it is believed the US dollar will continue to weaken," Lee said during a phone interview yesterday.

The NT dollar is likely to break through the NT$31 mark against the greenback in the latter half of the year, Lee said.

As Taiwan is an export-driven nation, the central bank would not sit idly by and watch the NT dollar rise rapidly hurting the competitive edge of exporters, she said.

But the monetary policymaker would not buck the trend to stop the currency from gaining when other Asian currencies are moving upward, the senior trader said.

"[The NT dollar's] advancing NT$0.3 a day should be the limit which the central bank can accept," Lee said.

The US dollar has fallen heavily over the past month amid growing concern about global economic imbalances, the prospects of a pause in US interest rate hikes and signs of forex reserve diversification by world central banks. It was mostly lower against other Asian currencies, falling to 52.075 Philippine pesos from 52.315 on Tuesday, to 37.8250 Thai baht from 38.2450, to 8,990 Indonesian rupiah from 9,315 and to S$1.5697 from 1.5822.

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