The New Taiwan Dollar continued its rise against the U.S. Dollar Dec. 28 on the back of sustained inflows of international hot money and local exporters offloading their year-end greenback positions.
The local unit rallied with an intraday surge of 3.22 percent to NT$29.445, its highest level in 13 years. Following intervention by the ROC Central Bank, the currency gave up most of its gains to close at NT$30.396, a rate not seen since July 2008.
The strong showing came after a central bank announcement Dec. 27 lowering nondeliverable forward contracts and exchange rate options for institutions’ net foreign exchange positions.
Sources familiar with the issue said the central bank recently contacted a major foreign institution in Taiwan concerning its high-volume currency market trading. While the central bank declined to comment on the matter, sources said the agency is keeping a close eye on institutions with irregular trading activities and is conducting surprise inspection visits.
The strong NT dollar is also causing concern among Taiwan’s top economic officials.
Council of Economic Planning and Development Minister Christina Y. Liu urged the private sector to consider using non-U.S. currencies for regional trade.
“Instead of having the local unit pegged to the dollar, Taiwan should pay more attention to a basket of currencies,” Liu said. “In this way, a rising NT dollar will not necessarily put a drag on the country’s export business.” (JSM)
Write to Meg Chang at meg.chang@mail.gio.gov.tw