The New Taiwan dollar yesterday rose to its highest level in 13-and-a-half years against the US dollar on the back of inward remittance of foreign capital and the rising trend among Asian currencies.
It is also the strongest level for the NT dollar versus the greenback since central bank Governor Perng Fai-nan (彭淮南) took office in February 1998.
The NT dollar closed NT$0.059 higher at NT$28.991 on the Taipei Forex market yesterday. At the smaller Cosmos Foreign Exchange market, the NT dollar ended at NT$28.945.
“The inflows of foreign capital increased the trading volume yesterday, driving up the appreciation of NT dollar against the US dollar,” a Taipei-based currency trader at Union Bank of Taiwan (聯邦銀行) said by telephone yesterday.
The daily trading volume stood at US$1.9 billion yesterday, with US$1.25 billion on the Taipei Forex and US$651 million on the Cosmos, he said.
The NT dollar hit NT$28.903 in the afternoon session yesterday, but the central bank intervened to help stabilize the currency and guard against derailment of the nation’s economic growth, he said.
The NT dollar’s appreciation yesterday also matched the rise in the euro and major Asian currencies against the US dollar, another currency trader at Bank of Taiwan (臺灣銀行) said yesterday.
The middle rate of Chinese yuan increased 36 basis points yesterday, the strongest level since China’s reform of the yuan’s exchange rate, while the South Korean won surged 0.5 percent to hit its highest level versus the greenback since the financial crisis of 2008, data showed.
Liang Kuo-yuan (梁國源), president of the Taipei-based Polaris Research Institute (寶華綜合經濟研究院), said the NT dollar would remain strong in the short term, as Asia’s emerging economies were healthier than other markets.
Continuing quantitative easing measures in the US would also lead to speculative money flowing into Asian markets in the short term, further driving up the appreciation of Asian currencies, including the NT dollar, Liang said.
However, Liang expected the central bank to stick to its “willow theory,” controlling the flexible exchange rates of the NT dollar to help it absorb external shocks.
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