Week sees steady daily gains in NT dollar

By Noah Weston, Special to The China Post

The New Taiwan dollar closed the week at NT$34.145, up a healthy click from last week’s close of NT$34.414, benefiting from both a strengthening of the Japanese yen and greenback sales by exporters to meet month-end expenses. The NT dollar actually closed each of the five trading sessions higher, with massive volume and some central bank intervention seen later in the week. The local unit ended Monday at NT$34.375, boosted mostly by a stronger yen and persistent fears that the greenback is on a downward track. But upward momentum was tempered in part by fears of action by the Central Bank of China (CBC). But the fears proved to be somewhat overblown, and the central bank in fact did not intervene in a strong way until Tuesday, said dealers. Despite suspected intervention by the CBC on Tuesday and Wednesday, to the tune of around US$200 million daily according to one dealer, the local currency drove ahead, ending at NT$34.309 and NT$34.230 respectively. Volume, which was on a gradual increase to US$425 million, US$690.5 million, and US$767 million for the first three days of the week, spiked to a near-record US$1.92 billion on Thursday, mainly reflecting exporter activity as month-end expenses loomed. “Judging from the large turnover, selling from exporters was panicky. To my knowledge, many exporters are still lining up to dump their U.S. dollars,” said a dealer with a foreign bank on Thursday. The local unit ended the day at a near-year high of NT$34.190 aided as well by a strong yen. Friday morning brought more gains for the local unit, which hit an intraday high of NT$34.048 before settling back down to NT$34.145 on a volume of US$864 million.

The heavy exporter-led morning drive was deflated both by moves from the Japanese central bank to break the yen’s winning streak, and by suspected central bank intervention locally, said dealers. The pair is expected to trade in the NT$34.05 and NT$34.25 range next week.