The NT dollar matched a 33-month record-high against the US dollar yesterday, as inward remittances and exporters' sell orders on the greenback continued to strengthen the local currency.
"After breaking the NT$31.240 barrier in the morning, there wasn't too much resistance," a local commercial bank dealer said. "The local currency is likely to challenge the NT$31 benchmark [today]."
The NT dollar hit an intraday high of NT$31.120 in the early afternoon, buoyed by strong inward remittances by custodian banks. However, importers' demand for greenbacks pared back some of the local currency's gains. Dealers said the central bank's intervention had eased somewhat.
"People's natural reaction to [central bank intervention] over the past couple of trading days was to automatically square off their bear positions for the greenback before the close," said a dealer who preferred to remain anonymous.
STRONG GAIN
The NT dollar gained NT$0.178 to close the day at NT$31.210 against the US dollar, it's strongest position since May 11 and May 12, 2005, when the close was the same for two days. Turnover was US$1.572 billion, down from US$1.728 billion the previous day.
Dealers anticipate the local currency's bullish trend will continue ahead of the presidential election on March 22. However, since the local currency has appreciated NT$0.536, or 1.7 percent, over the past six trading days, dealers said a boxed correction was likely in the short term.
Foreign investors registered a massive net stock purchase of NT$20.09 billion (US$65 million) yesterday, up from NT$17.28 billion the previous day.
LIBERALIZATION
Although market watchers have linked foreign investors' aggressive purchases of local stocks over the past couple of trading days to commitments to market liberalization made by both presidential candidates during their debate on Sunday, a local newspaper report speculating about a relaxation by the central bank was dismissed by the monetary policymaker.
The central bank reiterated in a statement yesterday that it would ensure that money wired into the country by foreign investors was used as outlined by investors and added that speculation about a change of attitude by the policymaker "cannot be further from the truth."
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