The New Taiwan dollar yesterday surged to its highest value since October 2000 against the US dollar, breaking the NT$32 level in Taipei, in line with a strengthening Japanese yen and South Korean won.
Dealers attributed the NT dollar's rise to robust overseas investors' net purchases of the nation's stocks and continuous decline in crude oil prices.
The currency climbed NT$0.209, or 0.7 percent, to close at NT$31.99 against its US counterpart in Taipei, its strongest close since Oct. 16, 2000. Turnover was US$971.5 million, higher than the previous day's US$552 million.
The benchmark TAIEX rose 69.33 points, or 1.2 percent, to close at 5,867.95, with overseas investors purchasing a net NT$3.8 billion of equities, the most since Nov. 19, according to Taiwan Stock Exchange's statistics.
"The oil price drop and the rally in the stock market" helped the NT dollar strengthen, said Christy Tan, regional market strategist at Forecast Ltd in Singapore. "By allowing the NT dollar to go stronger than NT$32, it's a signal the central bank may not be overly worried about the appreciation."
The NT dollar hit a daily high of NT$31.978 against the greenback at around 3pm, despite speculations that the central bank had intervened in early session, dealers said.
For the past three months, the NT dollar's 5.6 percent gain still lagged the yen's 7.3 percent advance and the more than 10 percent appreciation in the won.
As long as the yen and won are rising faster than the NT dollar, the central bank may not sell to reverse the trend, as those countries' export competitiveness worsens compared with Taiwan, Tan said.
The currency may rise to NT$31.80 by the end of the year, she said.