Shares closed 0.66 percent higher yesterday on hopes that the strength of the NT dollar will attract foreign capital, dealers said.
Some industrial and technology shares found favor, they said.
The TAIEX closed up 63.25 points at 9,631.51, on turnover of NT$139.41 billion (US$4.30 billion).
The index rose even though decliners outnumbered advancers 1,002 to 982, with 279 stocks unchanged.
The New Taiwan dollar closed NT$0.034 higher at NT$32.465 against the US dollar on continued foreign capital inflows. Foreign investors bought a net NT$7.63 billion worth of Taiwanese stocks yesterday, higher than NT$3.17 billion on Thursday, Taiwan Stock Exchange's data showed.
"The firmer Taiwan dollar is definitely a clear indicator of foreign interest picking up," Yuanta Core Pacific Securities (元大京華證券) assistant vice president Oliver Fang said.
"We are not the only beneficiary of this ongoing spate of [regional] currency appreciation led by the yuan," he said, adding that the local market had lagged its Asian peers and may continue to attract bargain-hunters.
"The Taipei bourse remains a laggard to Hong Kong and Seoul," he said.
Taipei stocks have a good chance of sustaining upward momentum in the short run and may test the year's high of 9,807 points attained in late July, Fang said.
For the week to yesterday, the weighted index closed up 19.79 points or 0.21 percent, after a 1.21 percent increase a week earlier.
Average daily turnover stood at NT$146.57 billion, compared with NT$146.24 billion a week ago.
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