Wed, Feb 23, 2005 - Page 1 News List

NT dollar hits highest level in four years

By Lisa Wang  /  STAFF REPORTER

The New Taiwan dollar rose 0.6 percent against its US counterpart yesterday to hit a four-year high, boosted by consistent foreign inflows to Taiwan's stocks, coupled with strengthening Asian currencies, traders said.

On the Taipei foreign exchange market, the NT dollar rose by NT$0.184 to close at NT$31.332, a level not seen since October 2000, with turnover expanding to US$1.34 billion.

The Korean won jumped 1.64 percent to mark a seven-year high against the US dollar yesterday.

"The faster-than-expected appreciation is mostly due to overseas fund managers' increasing their holdings in Asian stocks, especially Taiwanese and South Korean equities," a Taipei-based trader said on condition of anonymity.

Foreign investors bought a total of NT$3.02 billion worth of Taiwanese stocks yesterday. They have purchased a total of NT$92.09 billion since the beginning of this year, according to the Taiwan Stock Exchange.

The anonymous trader also attributed the weakness of the US dollar to a renewed concern that central banks were diversifying the allocation of their foreign-exchange reserves due to the greenback's declining value.

The NT dollar is expected to move in tandem with other Asian currencies in the near term, traders said.

"Demand for the local currency will increase, as there is no sign indicating an end to foreign investors' appetite for Taiwanese equities," a trader said.

The continued buying may further drive the NT dollar to challenge the NT$31.25 mark against the US dollar, which it has not surpassed since April 2000, the trader said.

A panic sell-off of US currency from Taiwanese importers and exporters to hedge against currency loss may occur, and would further support the strengthening trend of the NT dollar, the trader added.

Also see story:

Dollar slides on South Korean report

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