The New Taiwan dollar continued strengthening to a five-month high yesterday in Taipei, as the market still weighed the factor of interest rate hikes announced by the central bank on Thursday.
The NT dollar rose NT$0.018 to close at NT$32.736 against the US dollar, the strongest close since Jan. 9, Taipei Forex Inc said. Turnover was US$413 million.
The Taipei foreign exchange market remained open yesterday to make up for the Dragon Boat Festival holidays earlier this week.
The US currency was roiled on Friday by turbulence affecting the stock and bond markets, while the euro set another all-time high against the yen, which felt more pressure from the so-called carry trade.
The euro hit a record ?166.83 compared with ?165.61 in New York late on Thursday.
Meanwhile, the greenback shot past ?124 for the first time since December 2002, stretching as high as ?124.03. The greenback then eased back to ?123.87 compared with ?123.70 on Thursday.
The euro climbed to US$1.3467 from US$1.3387 a day earlier.
Diminishing expectations for a rate hike in Japan pushed the yen lower against other major currencies, traders said.
The prospects for an extension of the ultra-low interest rates in Japan ignited more carry trades, in which traders borrow yen to invest in higher-yielding assets elsewhere.
"No matter which way you slice it, carry trades refuse to die," said Kathy Lien at Forex Capital Markets. "The voracious appetite for these high-yielding currencies confirms that the market is not worried that a big disaster will fall upon the financial markets."
The dollar was dented by the rocky road for the US stock market.
"The Dow, bond yields and the US dollar went from being up strongly yesterday to being down strongly today," Lien said.
"Concerns for more hedge fund and sub-prime blowups has been the driver for the move but today's announced bailout by Bear Stearns suggests that the reaction in the financial markets may be a bit exaggerated," she said.
US share markets were roiled by concerns that mortgage failures in the subprime market may be spreading to the broader financial sector.
In late New York trading, the US dollar stood at 1.2293 Swiss francs from SF1.2414 on Thursday.
The pound rose to US$1.9992 from US$1.9923.
RSS