The New Taiwan dollar kept its upward momentum yesterday, rising NT$0.049 to close at a 16-month high against the US currency, in line with the rallies in the Chinese yuan and most other major Asian currencies.
The NT dollar crossed the NT$29 psychological barrier and hit a midday high of NT$28.93 versus the greenback before retreating to close at NT$29.039 — its highest level since Sept. 2, 2011.
On the smaller Cosmos Foreign Exchange market, the local currency closed at NT$28.951 against the US dollar, up NT$0.034 from Thursday.
Daily turnover stood at US$1.34 billion yesterday, with trading volume reaching US$908 million on the Taipei Forex Inc and US$428 million on the Cosmos.
“The rising trend of the NT dollar was in line with that of the Chinese yuan and the [South] Korean won,” a currency trader who refused to be named said by telephone.
Several foreign portfolio investors also set off a wave of selling in the US dollar, with some of them bringing in capital, which bolstered the local currency’s appreciation, he said.
The trader predicted that the NT dollar would close above NT$29 against the US dollar on Monday at the earliest, in line with the trend of other major currencies in Asia.
However, a Taipei-based currency trader at Union Bank of Taiwan (聯邦銀行) said the central bank would continue to intervene to curb the NT dollar’s appreciation, especially when the currency tries to move past the NT$29 mark against the greenback.
“I do not think the NT dollar is in a position to continue rising, considering the importance of export-oriented industries to Taiwan’s economy,” he said.
He said central bank Governor Perng Fai-nan (彭淮南) may maintain a wait-and-see attitude toward the upward momentum of the NT dollar before the end of his term on Feb. 25, but turn more aggressive if President Ma Ying-jeou (馬英九) re-appoints him as the bank’s leader, which is highly possible.
The NT dollar has risen 0.33 percent this year. On a weekly basis, the NT dollar rose 0.3 percent yesterday from Friday last week, when it closed at NT$29.125 to the greenback.