The New Taiwan dollar advanced as the resumption of direct shipping and flight links with China spurred optimism that improving relations with China will boost Taiwan’s economy.
The currency touched the highest level this month against the US dollar and the TAIEX stock index rose 3 percent as Taiwan and China eased a ban on direct transport links.
The agreement, which took effect yesterday, will reduce Taiwanese shipping lines’ costs by more than NT$1 billion (US$30 million) a year, the Apple Daily said, citing Yang Ming Marine Transport Corp (陽明海運) chairman Frank Lu (盧峰海).
Establishing links with China is “clearly a positive for Taiwan,” said Thomas Harr, a senior currency strategist at Standard Chartered Plc in Singapore.
The US dollar versus Asian currencies “is likely to grind lower going into the end of this year but may head higher next year as the recession deepens.”
The New Taiwan dollar rose 0.4 percent to NT$33.199 against the US currency as of the 4pm close, according to Taipei Forex Inc. It touched NT$33.169, the lowest level since Nov. 27.
Yang Ming Marine, Evergreen Marine Corp (長榮海運) and other Taiwan-based shipping companies will fill more than 70 percent of the capacity on their inaugural direct voyages to China, the Apple Daily said. The new services will boost Taiwanese shipping companies’ annual sales by more than NT$10 billion, according to the report.
Ten-year bonds fell for the first time in three days as stock gains helped damp risk aversion.
“Bonds are relatively weak because of stocks,” said Leo Sun, a debt trader at China Bills Finance Corp (中華票券金融公司) in Taipei. “Bonds will tend to be bearish this week.”
The yield on the 2.125 percent bond maturing September 2018 climbed three basis points to 1.465 percent as of 1:30pm close in Taipei, according to GRETAI Securities Market, Taiwan’s biggest exchange for bonds. Its price fell 0.3034, or NT$303.4 per NT$100,000 face amount, to 105.9674.