Taiwan dollar at 19-month high
The Taiwan dollar rose to a 19-month intraday high on Thursday, continuing its string of gains along with other Asian currencies amid optimism for economic recovery following China's strong growth data.
The currency rose to an intraday high of T$31.358 to the U.S. dollar, its highest since late August 2008 and was trading at T$31.363 at 0425 GMT.
The Taiwan dollar has risen about 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.
"With reserves at around 100 percent of GDP, the cost of sterilisation increases, and if China was to start allowing currency appreciation and the recovery was very much intact, they (the Taiwanese authorities) will start allowing more currency appreciation, and in terms of intervention they will start slowing it down," said Perry Kojodjojo, currency strategist at HSBC in Hong Kong.
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 had 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 on Thursday. China is Taiwan's main export destination.
Singapore said on Wednesday that its economy had fully recovered.
Foreign buying of Taiwan stocks also helped, with the benchmark index hitting a 12-week intraday high. Foreigners have been net buyers of Taiwan shares in each session of this month, bringing total net purchases to T$72.7 billion in April.
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$29.62 in two years.
Kojodjojo also said that domestic investor inflows into Taiwan would pick up as improving China trade links and a better outlook for the Taiwan economy make many Taiwanese more comfortable bringing their money back home.
"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.
Source: news.alibaba.com
Publication date: 4/15/2010
The Taiwan dollar rose to a 19-month intraday high on Thursday, continuing its string of gains along with other Asian currencies amid optimism for economic recovery following China's strong growth data.
The currency rose to an intraday high of T$31.358 to the U.S. dollar, its highest since late August 2008 and was trading at T$31.363 at 0425 GMT.
The Taiwan dollar has risen about 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.
"With reserves at around 100 percent of GDP, the cost of sterilisation increases, and if China was to start allowing currency appreciation and the recovery was very much intact, they (the Taiwanese authorities) will start allowing more currency appreciation, and in terms of intervention they will start slowing it down," said Perry Kojodjojo, currency strategist at HSBC in Hong Kong.
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 had 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 on Thursday. China is Taiwan's main export destination.
Singapore said on Wednesday that its economy had fully recovered.
Foreign buying of Taiwan stocks also helped, with the benchmark index hitting a 12-week intraday high. Foreigners have been net buyers of Taiwan shares in each session of this month, bringing total net purchases to T$72.7 billion in April.
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$29.62 in two years.
Kojodjojo also said that domestic investor inflows into Taiwan would pick up as improving China trade links and a better outlook for the Taiwan economy make many Taiwanese more comfortable bringing their money back home.
"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.
Source: news.alibaba.com
Publication date: 4/15/2010