The main Asian currencies, including the New Taiwan dollar, will gradually appreciate against the US dollar in the second half of the year, Japan’s former top currency policy official, Eisuke Sakakibara, said yesterday.
The appreciation should help lower inflationary pressure in the Asian markets, Sakakibara said.
“The weakening of the US dollar will be a long-term trend, as the pace of recovery in the US economy could slow down in six to nine months amid rising uncertainties from its heavy national debt,” Sakakibara, dubbed “Mr Yen,” told a media briefing.
That means the currencies in Taiwan, China, South Korea, Thailand and Singapore will have a great opportunity to appreciate against the greenback in the second half of the year, but these Asian markets need not worry about the appreciation’s negative impact on exports as it would also drive down their import costs, Sakakibara said.
As for the US, Sakakibara expects its slowing economic recovery would delay any interest rate increases.
“The US will not increase its policy rates until next year, as the country could face stagflation in the second half of the year,” he said.
Rising uncertainties in the US economy could even drive the government to extend its quantitative easing measures, Sakakibara said.
The New Taiwan dollar yesterday rose to a fresh 13-and-a-half-year high against the US dollar as foreign buying of local shares boosted demand for the local currency.
The NT dollar yesterday closed up NT$0.039 at NT$28.90 against the greenback on the Taipei Forex market, and closed even higher, at NT$28.84, on the smaller Cosmos Foreign Exchange market.
It was the third time that the NT dollar has hit a 13-and-a-half-year high this month. The local currency closed at NT$28.991 on April 8, and then at NT$28.926 last Thursday, the strongest levels since the NT dollar closed at NT$28.518 on Oct. 16, 1997.
“The stock market’s strong performance helped drive up the NT dollar,” a currency trader at Union Bank of Taiwan (聯邦銀行) said by telephone.
Net buying of Taiwanese shares by foreign investors boosted demand for NT dollars, with overseas fund managers and Chinese qualified domestic institutional investors buying a total of NT$12.21 billion (US$422.7 million) on the local bourse, said a trader who declined to be named.
Foreign fund inflows also boosted trading volume on the currency market to about US$1.47 billion yesterday, the trader said.
On the Taiwan Stock Exchange, the benchmark index closed above the 9,000-point barrier for the first time since early February, with the TAIEX rising 101.11 points, or 1.13 percent, to 9,049.25 on turnover of NT$132.68 billion.
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