The New Taiwan dollar rose against the US currency yesterday, adding NT$0.048 to close at NT$31.718, as exporters raised their holdings in the local currency to meet year-end fund demand, dealers said.
The currency saw support from the strength of the South Korean won and foreign institutional buying on the local bourse, they said.
A move by the People’s Bank of China (PBOC) to raise the Chinese yuan’s reference rate by about 0.06 percent added sales of the greenback on the local foreign exchange market, they added.
The central bank entered trading in the late session once again to help the US dollar recoup most of its earlier losses, dealers said.
For the whole of last year, the NT dollar weakened 5.6 percent, according to prices from Taipei Forex Inc.
It slumped 4 percent since the end of September and touched NT$31.894 on Wednesday last week, its lowest level since September 2010.
The local currency completed its biggest annual loss since 2001 as a slowing Chinese economy tempered the outlook for exports.
Growth in China is forecast to be 7.4 percent this year, the slowest since 1990.
A Chinese factory gauge fell to a seven-month low last month, data showed yesterday, as the world’s second-largest economy battles industrial overcapacity, factory-gate deflation and a housing slump.
The NT dollar sank to a four-year low last week as export growth slowed and prospects of an increase in US interest rates this year strengthened the greenback.
“China’s growth slowing down was the key reason behind the NT dollar’s fall last year,” Taipei-based KGI Securities Co (凱基證券) economist Andrew Tsai (蔡耀德) said. “The divergence between the monetary policy of the US Federal Reserve and other central banks has dragged down non-US dollar currencies.”
In local bonds, the yield on government notes due October 2019 slid 21 basis points, or 0.21 percentage point, since September, to 1.1 percent, GRETAI Securities Market prices showed. It advanced one basis point yesterday.
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