By Nick Land, The China Post
The appreciation of the NT dollar finally stalled yesterday, with the currency slipping to NT$34.668 from NT$34.650 on Monday. Turnover slumped heavily, halving to US$285.0 million from Monday’s US$562.0 million. With the recent stock market surge temporarily halted, along with the inflow of foreign equity investment, dealers lacked incentives to pursue last week’s struggle with the CBC, despite the perception that the NT dollar is undervalued in the short-term.
“It’s clear the bottom for the pair now is at 34.500. But after testing that level the past few sessions, traders aren’t willing to sell greenbacks aggressively just to see their positions absorbed by the central bank, after which the CBC pushes the NT dollar back down at the close,” said one dealer.
Dealers are watching the greenback/yen for indications as to the U.S. currency trend. An appreciating yen would renew upward pressure on the Taiwan currency, even in the absence of fresh momentum from inflows of overseas equity capital.