The New Taiwan dollar extended gains to a more than two-month high on speculation the nation's central bank will curb the currency's losses after it fell to a 17-month low last week.
The NT dollar rose for a fifth day and edged up NT$0.04 to close at NT$32.979, the strongest close since March 13 against the US dollar. Turnover was US$983 million on the Taipei Forex Inc, compared with US$1.478 billion the previous day.
The local currency has climbed 1.3 percent since May 23, when it closed at the lowest since December 2005, according to statistics provided by the Taipei Forex Inc. Dealers said the NT dollar was backed mainly by recent central bank moves.
"Triggered by the central bank's concern over the currency weakness, people liquidated their long US dollar positions," said Takeshi Kabe, a senior currency dealer in Tokyo at Mizuho Corporate Bank Ltd.
"Investors may also have moved to hedge their investment abroad by buying the Taiwan dollar," he said.
A long US dollar position is a bet benefiting from the US currency's gains. Kabe said the local currency may advance to around NT$32.80 this week.
Paul Huang (黃政聲), a deputy director general of the foreign exchange department of the central bank, said Taiwanese should consider currency risks overseas.
His remark came after the Chinese-language Commercial Times reported that Duann Jin-sheng (
Domestic interest rates are among the lowest in the region, encouraging locals to send money abroad.
Since January, the NT dollar has declined 1.2 percent as investors shunned fixed-income assets because of the nation's benchmark interest rate of 2.875 percent. The US Federal Reserve rate is 5.25 percent.
"We are concerned that some investors might make a wrong judgment on the currency's movement," Huang said in a phone interview.
"We want to remind them of foreign-exchange risks when making overseas investments," he said.
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