The New Taiwan dollar advanced to the strongest level in 16 months after China’s exports increased at more than three times the pace estimated by economists, boosting the outlook for regional trade.
The NT dollar climbed the most in a week as China, Taiwan’s biggest overseas market, said yesterday that shipments gained 17.7 percent from a year earlier last month and imports jumped 55.9 percent.
Speculation that China will resume appreciation in the yuan this year raises the odds that other Asian currencies will also strengthen, said Rod Hu, a currency trader in Taipei at Shinkong Life Insurance Co (新光銀行).
“We expect the renminbi [yuan] to be revalued against the [US] dollar this year, probably in the second half,” Hu said. “If the [US] dollar moves lower against the yuan, all money will chase Asian currencies this year.”
The NT dollar advanced 0.3 percent to NT$31.780 against the US dollar as of 4pm, Taipei Forex Inc said. It reached NT$31.720, the strongest level since September 2008.
The yuan has been kept at about 6.83 per dollar since July 2008, after climbing 21 percent in the three years after a peg to the greenback was abandoned in 2005, to help exporters weather a global recession.
Twelve-month yuan forwards rose 0.4 percent yesterday to 6.601, reflecting bets the currency will strengthen 3.4 percent in a year from its spot rate of 6.8265.
Taiwan’s 10-year bonds advanced on speculation lenders invested excess funds in government securities.
Local banks held NT$177.3 billion (US$5.6 billion) more in reserves than required by the monetary authority as of Friday, the Taipei Interbank Money Center said.
The nation’s central bank said last month that it will maintain an “appropriately loose monetary policy” to support the economy.
“There are some people taking in government bonds,” said Vincent Chiu (邱文昇), a debt trader at Polaris Securities Co (寶來證券) in Taipei. “Ample liquidity is a factor.”
The yield on the 1.375 percent bond maturing September 2019 fell one basis point to 1.53 percent, according to GRETAI Securities Market, Taiwan’s biggest exchange for bonds. Its price climbed 0.0843, or NT$84.30 per NT$100,000 face amount, to 98.5897. A basis point is 0.01 percentage points.
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