State-run CPC Corp, Taiwan (台灣中油) may reduce its purchases of US dollar forwards on bets the local currency will appreciate.
The company’s forward purchases last month equaled about 27 percent of its net demand for US dollars, and the amount “will probably be lower this month,” Lin Maw-wen (林茂文), a CPC vice president, said in a telephone interview yesterday.
Forwards are agreements to buy and sell assets at current prices for future delivery.
The New Taiwan dollar rose the most in a month yesterday on speculation China will resume gains in the yuan and as international investors plowed more funds into local stocks.
The local currency may appreciate 5.4 percent to NT$30 against its US counterpart by the first quarter next year, according to a median of 14 analyst forecasts.
“Under the big picture of Taiwan dollar appreciation, we’ll do less and less forward trading,” Lin said.
CPC’s forward purchases are typically equal to between 55 percent and 70 percent of its demand for US dollars when the local currency is on the decline, and between 20 percent and 35 percent when it is on the rise, Lin said.
The refiner had US$15.6 billion in US dollar costs last year, compared with US$3.2 billion received from customers, he said. The company sells most of its products in Taiwan.
The NT dollar appreciated 0.3 percent to NT$31.615 against its US counterpart as of 4pm local time yesterday, according to Taipei Forex Inc. The currency rose 0.5 percent this week.
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