15 April 2010
Taiwan dollar at near 20-month high on China data
TAIPEI: The Taiwan dollar rose to its highest close in nearly 20 months on Thursday, helped by strong growth data from China that boosted demand for
Asian assets and continuing a string of gains.
The currency touched T$31.339 to the U.S. dollar, before settling at T$31.375, up 0.27 percent on the day and its highest close since August 2008.
The Taiwan dollar has risen over 2 percent this year and is expected to gain further on strength in regional economies and currencies, a backdrop that would leave the island's interventionist central bank more at ease with a stronger currency, analysts said.
Taiwan's central bank has traditionally managed the currency to protect the island's export-driven economic model. While it had intervened of late, its moves have been aimed at smoothing the currency's rise rather than reversing it, analysts said.
"Taiwan's central bank will intervene in a way that allows a gradual rise of the Taiwan dollar so that it's easier for local exporters to manage," said a dealer at a foreign bank in Taipei.
For the short term, that would see the bank keeping the currency above T$31.20, the dealer said. China's annual economic growth quickened to 11.9 percent in the first quarter, the fastest rate in nearly three years, giving a boost to the Taiwan dollar.
China is Taiwan's main export destination. Other Asian exporter economies are picking up too, with Singapore saying on Wednesday that its economy had fully recovered.
Foreign buying of Taiwan stocks also helped Thursday's gains, with the benchmark index hitting a 12-week closing high. Foreigners have been net buyers of Taiwan shares in each session this month, bringing total net purchases to T$82.5 billion as of Thursday's close.
Taiwan dollar at near 20-month high on China data
TAIPEI: The Taiwan dollar rose to its highest close in nearly 20 months on Thursday, helped by strong growth data from China that boosted demand for
Asian assets and continuing a string of gains.
The currency touched T$31.339 to the U.S. dollar, before settling at T$31.375, up 0.27 percent on the day and its highest close since August 2008.
The Taiwan dollar has risen over 2 percent this year and is expected to gain further on strength in regional economies and currencies, a backdrop that would leave the island's interventionist central bank more at ease with a stronger currency, analysts said.
Taiwan's central bank has traditionally managed the currency to protect the island's export-driven economic model. While it had intervened of late, its moves have been aimed at smoothing the currency's rise rather than reversing it, analysts said.
"Taiwan's central bank will intervene in a way that allows a gradual rise of the Taiwan dollar so that it's easier for local exporters to manage," said a dealer at a foreign bank in Taipei.
For the short term, that would see the bank keeping the currency above T$31.20, the dealer said. China's annual economic growth quickened to 11.9 percent in the first quarter, the fastest rate in nearly three years, giving a boost to the Taiwan dollar.
China is Taiwan's main export destination. Other Asian exporter economies are picking up too, with Singapore saying on Wednesday that its economy had fully recovered.
Foreign buying of Taiwan stocks also helped Thursday's gains, with the benchmark index hitting a 12-week closing high. Foreigners have been net buyers of Taiwan shares in each session this month, bringing total net purchases to T$82.5 billion as of Thursday's close.
The Taiwan dollar still lags other Asian currencies, however.
A measure of Taiwan NDFs showed the Taiwan dollar continuing to appreciate, with six-month NDFs showing a rate of around T$30.73 to the U.S. dollar, widening to T$29.75 in two years from the previous day's T$29.62.
Longer term, the currency is also likely to get a lift from domestic investor inflows into Taiwan as improving China trade links and a better outlook for the Taiwan economy make many Taiwanese more comfortable bringing their money back home, said Perry Kojodjojo, currency strategist at HSBC in Hong Kong.
"A structural change is happening: cross-Strait relations are improving, the currency's appreciating, the economy's doing really well and some of this overseas capital will start coming back to Taiwan," he said.
"Domestic inflows are going to be the key driver for Taiwan and the Taiwanese currency, and should push more appreciation," he added, noting that it would be difficult for the central bank to try to restrict such flows.
A measure of Taiwan NDFs showed the Taiwan dollar continuing to appreciate, with six-month NDFs showing a rate of around T$30.73 to the U.S. dollar, widening to T$29.75 in two years from the previous day's T$29.62.
Longer term, the currency is also likely to get a lift from domestic investor inflows into Taiwan as improving China trade links and a better outlook for the Taiwan economy make many Taiwanese more comfortable bringing their money back home, said Perry Kojodjojo, currency strategist at HSBC in Hong Kong.
"A structural change is happening: cross-Strait relations are improving, the currency's appreciating, the economy's doing really well and some of this overseas capital will start coming back to Taiwan," he said.
"Domestic inflows are going to be the key driver for Taiwan and the Taiwanese currency, and should push more appreciation," he added, noting that it would be difficult for the central bank to try to restrict such flows.
economic times
