The New Taiwan dollar extended its bullish run April 15 as global “hot money” continued to flood into Asia, driven by expectations that regional currencies will increase further in value.
At the close of Thursday, the NT dollar advanced NT$0.085 to NT$31.375 against the U.S. dollar on turnover of US$1.139 billion, thanks to an influx of US$500 million in foreign capital. Over the last two days, more than US$1.1 billion in foreign funds have entered the island.
The rally of Asian currencies helped boost the local unit to as high as NT$31.339 in intraday trading, up NT$0.121 from the day before. Last-minute intervention by the Central Bank of the Republic of China put a lid to the gains, but the domestic currency still stood above NT$31.4 line at the closing bell, the highest level in nearly 20 months.
A forex dealer said the market expects the NT dollar, the Chinese yuan and other Asian currencies to gain more ground going forward. Many exporters as a result disposed of their holdings in the greenback. The local currency is expected to challenge the NT$31.2 or even NT$31 mark in the near term, as it is unlikely that the NT will move in a direction opposite to other currencies in the region.
In what was a departure from past practice, the CBC on April 15 took action early during the trading day and continued to intervene throughout the day. Most market participants did not buy additional U.S. dollars, as they had already done so previously, so that the central bank was in effect the only cushion preventing the greenback from sliding further.
The recent upswing in the NT dollar has boosted the local currency by NT$0.444, or 1.42 percent, so far this month.
Asian currencies increased almost across the board yesterday. The South Korean won soared 0.42 percent to 1,107.5 against the U.S. dollar. The Singapore dollar gained 0.36 percent, while the Japanese yen jumped 0.35 percent. The euro, on the other hand, fell 0.24 percent against the U.S. dollar. (HML-HZW)