The New Taiwan dollar rose 0.04 percent, or NT$0.013, to NT$30.007 against the US dollar in Taipei trading yesterday. This was the highest it has been in two-and-a-half months as traders are downbeat about the US currency, one trader said.
Both sellers and buyers appear to share the NT$30 resistance reportedly favored by the central bank, allowing the local currency to pull back a bit after rising above the mark in intraday trading.
“The NT dollar is unlikely to break the resistance in the foreseeable future as repeatedly seen this year,” a currency trader at a state-run bank said by telephone.
Importers would be inclined to lend support to the greenback whenever it drops near the threshold, the trader said anonymously.
Turnover totaled US$705 million at the Taipei Foreign Exchange Market.
Altogether, the local currency has gained 7.04 percent this year.
Currency traders worldwide became more conservative towards the greenback after US Federal Reserve officials voiced concerns that inflation might remain below the 2 percent level for longer than expected.
That could drive it to slow the pace in normalizing its monetary policy, the trader said.
The NT dollar might hold firm like other currencies in the region, trading in a tight range of NT$30 to NT$30.4 in the short term, he said.
Exporters would likely call for intervention if the NT dollar appreciates faster, he added.
The NT dollar opened at NT$29.998 and moved between NT$29.946 and NT$30.009 before the close.
Exporters tend to trim US dollar holdings toward year-end to fund the distribution of bonuses, which could put extra pressure on the greenback, the trader said.
The Australia and New Zealand Banking Group (ANZ) yesterday raised its forecast for Taiwan’s GDP growth to 2.9 percent this year, 0.7 percentage points higher than its original projection.
ANZ attributed the upward revision to a stronger quarterly showing and expected the momentum to continue this quarter and next year.
“GDP growth accelerated to 3.11 percent last quarter, beating expectations and the highest since the first quarter in 2015, on the back of a boost in tech exports,” ANZ said.
The lender said it could even gather further strength.
The economic improvement suggests healthy earnings performance by local firms, which in turn would attract capital inflows and buoy the NT dollar, ANZ said, adding that a strong NT dollar would ease inflation pressure linked to international raw material prices and allow consumer prices to grow by a mild 0.7 percent next year.
Against this backdrop, the central bank would leave interest rates unchanged for the whole of next year to help mitigate the risk of the US Federal Reserve’s balance sheet normalization, ANZ said.
The decline in private investment, noticeably by major semiconductor firms, should be short-lived as improved global demand will spur investment in manufacturing facilities and capabilities, it said.
It expects GDP growth to rise to 3 percent next year.
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