Standard Chartered PLC raised its forecasts for the New Taiwan dollar on speculation the central bank will allow further gains to help tame inflation.
The NT dollar will strengthen 0.8 percent to NT$28.80 by the end of June, senior foreign exchange strategist Robert Minikin and Taipei-based economist Tony Phoo (符銘財) wrote in a report released yesterday.
The local currency will rise more rapidly in the second half, advancing a further 2.5 percent to NT$28.10 by the end of the year, they forecast. Taiwan’s monetary authority may take a similar approach to China, allowing its currency to gain to trim trade imbalances and fight imported inflation, the report said.
“The broad consensus is Taiwan should let the currency rise to trim its large current-account surpluses,” Hong Kong-based Minikin said in an interview.
The NT dollar closed yesterday at NT$29.3 against its US counterpart, according to Taipei Forex Inc. The currency reached NT$29.006 on Jan. 13, the strongest level since October 1997. It strengthened 3.2 percent in the fourth quarter, the best performance among Asia’s 10 most-traded currencies.
“After such a large move, we may see faster appreciation only in the second half of this year,” Minikin said.
Taiwan’s consumer prices gained 1.25 percent last month from a year earlier after increasing 1.53 percent the previous month, the fastest pace since March last year, while the trade surplus last month jumped almost four-fold from November, according to the latest government statistics.
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