The New Taiwan dollar yesterday gained 0.74 percent, or NT$0.22, to a four-year high of NT$29.628 against the US dollar in Taipei trading, rising at the fastest pace in more than eight months on the back of hot money inflows, traders said.
The increase was in stark contrast with a tiny range of trade for several months after an 8.14 percent appreciation last year. Turnover totaled US$1.18 billion (US$39.83 million) at the Taipei Foreign Exchange Market and Cosmos Foreign Exchange Market.
“The trend had to do with general expectations of extended rallies across emerging equity markets,” a trader said on condition of anonymity.
The TAIEX advanced 0.64 percent to 10,710.73 on turnover of NT$103.559 billion yesterday, after foreign institutional investors increased their positions by NT$8.65 billion, Taiwan Stock Exchange data showed.
Local proprietary traders built up holdings by NT$885 million, while mutual funds cut NT$134 million.
Foreign investors have shown revived interest in local shares because continued economic expansion in the US bodes well for Asian nations which are home to manufacturing facilities of global consumer brands, the trader said.
Asian central banks could take cues from the US Federal Reserve and tighten their monetary policy in line with stronger GDP showings, another trader said.
The Bank of Korea in November last year raised interest rates by 25 basis points for the first time in six years as the economy exceeded even the highest expectations, he said.
The won gained 0.88 percent yesterday, outperforming the NT dollar and other currencies, a Bank of Korea statement said.
The yuan picked up 0.16 percent, while the yen climbed a marginal 0.02 percent, the statement said.
Receding appetite for risk-hedging tools, such as the yen, accounted for its lackluster performance, a trader said.
ADVANCED: Previously, Taiwanese chip companies were restricted from building overseas fabs with technology less than two generations behind domestic factories Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), a major chip supplier to Nvidia Corp, would no longer be restricted from investing in next-generation 2-nanometer chip production in the US, the Ministry of Economic Affairs said yesterday. However, the ministry added that the world’s biggest contract chipmaker would not be making any reckless decisions, given the weight of its up to US$30 billion investment. To safeguard Taiwan’s chip technology advantages, the government has barred local chipmakers from making chips using more advanced technologies at their overseas factories, in China particularly. Chipmakers were previously only allowed to produce chips using less advanced technologies, specifically
The New Taiwan dollar is on the verge of overtaking the yuan as Asia’s best carry-trade target given its lower risk of interest-rate and currency volatility. A strategy of borrowing the New Taiwan dollar to invest in higher-yielding alternatives has generated the second-highest return over the past month among Asian currencies behind the yuan, based on the Sharpe ratio that measures risk-adjusted relative returns. The New Taiwan dollar may soon replace its Chinese peer as the region’s favored carry trade tool, analysts say, citing Beijing’s efforts to support the yuan that can create wild swings in borrowing costs. In contrast,
VERTICAL INTEGRATION: The US fabless company’s acquisition of the data center manufacturer would not affect market competition, the Fair Trade Commission said The Fair Trade Commission has approved Advanced Micro Devices Inc’s (AMD) bid to fully acquire ZT International Group Inc for US$4.9 billion, saying it would not hamper market competition. As AMD is a fabless company that designs central processing units (CPUs) used in consumer electronics and servers, while ZT is a data center manufacturer, the vertical integration would not affect market competition, the commission said in a statement yesterday. ZT counts hyperscalers such as Microsoft Corp, Amazon.com Inc and Google among its major clients and plays a minor role in deciding the specifications of data centers, given the strong bargaining power of
TARIFF SURGE: The strong performance could be attributed to the growing artificial intelligence device market and mass orders ahead of potential US tariffs, analysts said The combined revenue of companies listed on the Taiwan Stock Exchange and the Taipei Exchange for the whole of last year totaled NT$44.66 trillion (US$1.35 trillion), up 12.8 percent year-on-year and hit a record high, data compiled by investment consulting firm CMoney showed on Saturday. The result came after listed firms reported a 23.92 percent annual increase in combined revenue for last month at NT$4.1 trillion, the second-highest for the month of December on record, and posted a 15.63 percent rise in combined revenue for the December quarter at NT$12.25 billion, the highest quarterly figure ever, the data showed. Analysts attributed the
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