The New Taiwan dollar closed up 0.41 percent against the US dollar yesterday, hitting its highest level in more than four months, thanks to strong foreign portfolio inflows.
The NT dollar rose to NT$29.611 versus the greenback midway through yesterday’s session, but later retreated, closing up NT$0.121 at NT$29.721 against the US dollar on the Taipei Foreign Exchange Market — its highest level since May 9.
On the smaller Cosmos Foreign Exchange Market, the local currency ended at NT$29.715 against the US dollar, up NT$0.115 from Friday last week.
Daily trading volume remained steady at US$1.22 billion yesterday, with US$805 million on the Taipei Forex and US$416 million on the Cosmos.
“The foreign portfolio inflows helped boost the level of the NT dollar against the greenback,” a Taipei-based currency trader at Union Bank of Taiwan (聯邦銀行) said by telephone.
Foreign portfolio investors bought a net total of NT$13.35 billion (US$449.18 million) worth of shares on the local bourse yesterday, with the benchmark TAIEX closing up 112.86 points, or 1.38 percent, at 8,255.34 on turnover of NT$76.28 billion.
The strong inflows further raised currency rates, the trader said.
He said the NT dollar may remain relatively strong, as the government’s move to raise electricity rates from Oct. 1, as well as recent political turmoil involving President Ma Ying-jeou (馬英九) and Legislative Speaker Wang Jin-pyng (王金平), may lead the central bank to maintain a stable currency rate.
The rising NT dollar might not exceed NT$29.5 versus the greenback, given Taiwan’s modest economic growth momentum, he said.
Yuanta-Polaris Research Institute (元大寶華綜合經濟研究院) said the NT dollar exchange rate may continue following the South Korean won in the near term, as the issue of the US Federal Reserve’s next chairmanship is likely to put further pressure on the US dollar.
The won rose 0.44 percent to 1,082.2 versus the greenback as of 4pm yesterday, from 1,087 on Friday last week, according to the central bank’s data.