Nick Land, The China Post
The NT dollar climbed to NT$34.648 yesterday from NT$34.668 on Tuesday, more than making up for its brief slippage. Turnover also rose substantially to US$424.5 million from Tuesday’s US$285.0 million. Dealers saw the recovery of the stock market from its two-day correction as a key factor in the strengthening of the NT dollar, boosting the flow of funds into the local currency.
Taiwan’s resilient trade balance, despite tumbling figures for both exports and imports, is also working to bolster the unit.
“With the rise in the stock market, funds continued to flow back into Taiwan, putting pressure on the greenback” said one dealer, adding that “exporter selling largely outpaced that of importer buying, also causing an excess supply of U.S. currency in the market.” Dealers said that the CBC refrained from intervening against the NT dollar yesterday, perhaps happy – or at least willing — to accept a gentle appreciation.
Having been thwarted in their recent attempts to test the NT$34.5 region by concerted CBC counter-action, dealers thought it unlikely that a return to the upward surge of last week was imminent — unless the greenback exhibits significant weakness against other currencies.