Taiwan's dollar may strengthen this week on optimism international investors will increase purchases of the nation's equities as the economy expands, according to a Bloomberg News survey.
An advance in the currency will extend three straight quarters of gains, the longest winning stretch since 2003, as overseas investors bought stocks over the past 15 months. The government in May raised its growth estimates and a report this month showed exports, which account for about half of the economy, rose last month at the fastest pace in eight months.
"Things are still pretty good in Taiwan," said David Mann, a foreign-exchange strategist in Hong Kong at Standard Chartered Bank Plc. "You will still see some good, healthy appetite for Taiwanese assets. That should help the currency."
The New Taiwan dollar declined 0.5 percent to NT$32.86 against the US dollar on turnover of US$1.11 billion on the Taipei Foreign Exchange yesterday.
Standard Chartered expects the local dollar to strengthen to NT$31.40 by the end of the third quarter and NT$31 by year-end.
Among 12 investors, strategists and traders surveyed by Bloomberg from Singapore to Seoul on Friday, seven recommended buying the NT dollar, two advised selling it and three said to hold it.
On May 18 Taiwan's statistics bureau raised its full-year estimate for economic growth to 4.31 percent, from a February projection of 4.25 percent. Goldman Sachs Group Inc the next day lifted its forecast for this year to 4.2 percent from 4 percent and for next year to 4.5 percent from 4.1 percent.
Overseas investors have been net buyers of the nation's shares every month this year, and bought NT$18 billion (US$552 million) on June 30, the most this year, according to stock exchange data. Emerging-market stock funds received more than US$1 billion in inflows two weeks ago, snapping seven weeks of withdrawals, Emerging Portfolio Fund Research said on Friday.
As exports have risen, unemployment declined to 3.92 percent in May, the lowest since February 2001.
"There's still good growth and the employment numbers are looking pretty good," said Steve Rowles, a currency strategist at CFC Seymour Ltd in Hong Kong. "These positive factors will help the Taiwan dollar." He declined to give a forecast.
Gains may be limited by concern rising oil prices, which are up 28 percent this year and on Friday touched a record, will slow growth and increase the nation's demand for US dollars.
Taiwan imports 98 percent of its energy needs.
Crude oil imports are up 23 percent from a year earlier, the Bureau of Energy said last Tuesday. Oil prices are rising amid escalating violence in the Middle East and disruptions to supply in Nigeria.
"There's a lot of companies in Taiwan seeing the higher oil prices and needing more dollars to pay for it," said Gary Huang, a currency trader at Union Bank of Taiwan (
Huang sees the currency trading between NT$32.30 and NT$32.80 this week.
The Asian Development Bank on June 1 said rising oil prices may mean its 7.2 percent 2005 growth forecast for the region, which includes 43 countries excluding Japan, will be an "overestimation."
Investors also recommended buying the Indonesian rupiah, Philippine peso, South Korean won, Thai baht, Singapore dollar and Malaysian ringgit. They've all risen this year in part as overseas investors bought the nation's shares and some Asian central banks raised rates, boosting the yield on government bonds.
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