The New Taiwan dollar yesterday rose another 0.53 percent, or NT$0.158, to NT$30.052 against the greenback in Taipei trading, the highest level in more than two-and-a-half years as foreign funds continued to invest in Asian currencies, especially the South Korean won and the NT dollar, traders said.
The latest appreciation came with a large turnover of US$1.48 billion, a 47.06 percent surge from Friday, according to data from the Taipei Foreign Exchange Market and the Cosmos Foreign Exchange Market.
“Foreign funds are driving the NT rally and will decide if the local currency can hold the NT$30 mark against the greenback,” a trader at a local bank said by telephone.
The NT dollar again tested the psychological NT$30 barrier during the session when it hit NT$29.965 before immediately pulling back and settling at the closing level, the trader said.
It seems that every time the NT$30 barrier is breached, buyers of US dollars, mostly importers, enter the market and slow the pace of appreciation, the trader said.
He declined to speculate on the NT dollar going forward, saying it has defied all forecasts this year.
The NT dollar’s latest rise is relatively moderate compared with the won’s 0.77 percent gain, the central bank said in a brief statement.
As of Wednesday, the local currency had gained 7.1 percent this year, making it the second-strongest performer after the won, which increased 8 percent, the central bank said on Friday.
The central bank would act if it spots speculation activity, Deputy Governor Yang Chin-long (楊金龍) said in a surprise appearance at a central bank news conference in Taipei on Friday.
Yang attributed the appreciation on US$8.2 billion of foreign funds to buy local shares so far this year.
The TAIEX yesterday edged up 0.5 percent, or 49.64 points, to 9,997.26 on light volume of NT$70.17 billion, with foreign institutional players building up net positions by a modest NT$1.11 billion, Taiwan Stock Exchange data showed.
“The central bank will take action against fund inflows that fail to match their declared intent,” Yang said.
Foreign-exchange losses seriously eroded profitability at the nation’s exporters and life insurers in the first quarter and might continue to weigh, albeit at a milder pace.
The central bank has refrained from intervening in the foreign-exchange market since the US placed Taiwan on its currency-monitoring watch list in October last year and failed to remove it during a review last month.
“I forget” Yang said when asked if the central bank had talked to any foreign custodian banks about the currency-monitoring issue.
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