The New Taiwan dollar rebounded from a three-year low yesterday as US stock gains bolstered demand for emerging-market assets.
The local currency strengthened the most this month, rising in tandem with most of the region’s currencies. The Standard & Poor’s 500 Index climbed 4.4 percent on Wednesday on speculation that US President Barack Obama’s stimulus plan would include a US$50 billion-plus program to stem foreclosures and inject capital into banks.
The NT dollar gained 0.3 percent to close at NT$33.55 versus the greenback yesterday, its steepest climb since Dec. 30, Taipei Forex Inc said.
Turnover reached US$644 million, down from USS$1.01 billion the previous day.
Earlier yesterday, the local currency touched NT$33.79, the lowest level since October 2005. Local financial markets are closed until Feb. 2 for the Lunar New Year holiday.
“US stock markets rallied overnight, and the Asian currencies are tracking that,” said Maya Pinto, an economist at IDEAglobal in Singapore.
“Even if there’s an improvement in these currencies, it’d be more of a short-term phenomenon. Our forecast is for Asian currencies to maintain a weak bias because the data is going to be very ugly in the region,” Pinto said.
Export orders, a guide to shipments in the next one to three months, are expected to drop a record 37 percent last month from a year earlier, economists forecast in a Bloomberg News survey.
Taiwan will release its data on export orders today. Overseas sales account for about 70 percent of Taiwan’s GDP.
The local currency and overseas sales may weaken after China reported its economy expanded at the slowest pace in seven years. GDP grew 6.8 percent in the fourth quarter from a year earlier, matching the median estimate in a Bloomberg News survey. China is Taiwan’s largest export market.