The central bank signaled that the New Taiwan dollar's strength is not a concern, after the unit finished a week of gains to close at its strongest level in four months.
The New Taiwan dollar ended at NT$34.898 against the US dollar yesterday, compared with Thurs-day's NT$34.940, the highest closing level since Dec. 20.
The currency reached an intra-day high of NT$34.838, the biggest gain in 11 months. Trading volume surged to US$1.41 billion from US$632 million Thursday, the highest daily volume since early August.
"The New Taiwan dollar's appreciation today against the US dollar is normal," Central Bank of China Deputy Governor Liang Fa-chin (梁發進) said at a press conference.
Overseas investor interest in Taiwan's stocks fueled demand for the currency to settle transactions, boosting the local currency's value, traders said. These fund managers were betting the nation's growth prospects would benefit company earnings and increase stock returns, analysts said.
International money managers have scooped up more than a net NT$29 billion (US$832 million) worth of stocks in the five sessions before yesterday's. The TAIEX rose to an 18-month high yesterday and has climbed more than 16 percent this year.
"The strength in the New Taiwan dollar is long overdue, as we've already seen a massive rally in the equity market," said Steven Xu, senior economist at SG Securities Asia in Hong Kong. "Keeping the currency artificially weak is not sustainable in the long run." The unit may rise to NT$33.50 by the end of the year, he said.
Taiwan's exports fell less than expected in March in part because global demand for computers and mobile phones rebounded. The nation's jobless rate fell in February for the first time in 18 months as manufacturers started rehiring following rising overseas demand.
Unemployment slid to 5.12 percent from 5.14 percent in January, according to Directorate General of Budget, Accounting and Statistics.
"The unemployment rate at 5 percent is probably at the peak and exports will kick in," Xu said. "The central bank is going to tolerate some appreciation in the currency."
In related news, the central bank yesterday closed a weeklong course entitled the Federal Reserve System Course on Banking Supervision:Market Risk Analysis.
Five senior financial experts from the board of governors of the Federal Reserve System, the federal reserve banks of Chicago and San Francisco and the Financial Stability Institute of Bank for International Settlements were invited to deliver speeches during the course, the central bank said in a statement.
The training course comprised two parts: a three-day lecture course on up-to-date supervisory issues and a five-day analysis session with a focus on market risk management.
In total, 28 participants representing their respective central banks and regulatory agencies from 11 countries, including Indonesia, Japan, Malaysia, Mongolia, Nepal, Pakistan, The Philippines, Singapore, Sri Lanka, Taiwan and Thailand, took part in the course, the central bank said.
RSS