NT dollar edges up further on stock gains

Nick Land, The China Post

The NT dollar edged up further yesterday, closing at NT$34.582 compared to Monday’s NT$34.599. Turnover was up substantially, rising to US$486 million from US$314 million on Monday. Continuing gains in the local stock market pushed the NT dollar up strongly early in the session, despite a hardening of the greenback against the yen. Overseas NDF sales took the local unit up to NT$34.546 by mid-session although it ended well off highs.

According to dealers the CBC intervention was once again acting as a significant brake on the appreciation of the Taiwan unit, with the bank buying greenbacks on lows after several days on the sidelines. Although the central bank may be willing to tolerate a gradual NT dollar appreciation, one dealer remarked that “it doesn’t appear the CBC wants the exchange rate to dip below 34.500. This is likely to be the case for the next few months.”

Dealers expect the NT dollar to remain sensitive to local stock market performance in the short term, unless thrown off-track by yen-greenback volatility.