The Central Bank of the ROC and the Cabinet-level Financial Supervisory Commission are stepping up efforts to discourage international speculators from targeting the New Taiwan dollar, according to sources familiar with the issue.
Riding on the continuing strength of Asian currencies, the NT dollar breached the NT$31 mark with a gain of nearly NT$0.5 against the U.S. dollar in intraday trading Oct. 6.
The currency gave up most of its gain after the CBC stepped in late in the session, closing at NT$31.132 against the greenback, the highest level in more than two years.
The recent strong showings of the NT dollar have triggered concern that the local unit might become a target of currency speculation. Sources pointed out that the CBC has begun banking inspections to look for anomalies in forex transactions at local financial institutions. Such moves by the authorities will function as a deterrent, they added.
The FSC is also keeping a close eye on incoming funds from foreign institutional investors, who injected US$2.35 billion to Taiwan in September after two months of net fund outflows, the sources noted.
Such funds should be directed to equity investment on the local bourse in accordance with their declared purpose of remittance, an FSC official said. “We will work with the CBC and take action when necessary to prevent currency speculation by international hot money,” he added. (THN)
Write to Meg Chang at meg.chang@mail.gio.gov.tw