The New Taiwan dollar weakened, snapping an 11-day rally, after a Chinese-language business daily reported the central bank may sell the currency to stem its gains.
The NT dollar fell NT$0.087 to close at NT$30.95 against its US counterpart in Taipei, reducing its gain for the week to 0.7 percent.
"The central bank has given a warning to the market," said William Chou, a foreign-exchange analyst at Hua Nan Commercial Bank (華南銀行). "With this atmosphere, nobody wants to push the Taiwan dollar higher. It's close to the red line for the central bank."
Banks may have their foreign-exchange licenses suspended or revoked if they help overseas currency traders speculate in the NT dollar, the paper said, without citing anyone. The local currency, which had the highest close on Thursday since July 12, 2000, has increased 2.6 percent against its US counterpart this year, to become the third best performer after the Sri Lankan rupee and South Korean won.
President Chen Shui-bian (陳水扁) said on Feb. 24 that he won't pursue independence in his last three years in office and will seek direct transport links with China.
"The political situation has improved and the outlook for some stocks is better, so a large inflow of capital may still come into Taiwan," said Tommy Ong, vice president of the treasury and markets at DBS Bank (Hong Kong) Ltd, a unit of Southeast Asia's biggest lender.
"That is supporting the Taiwan dollar," Ong said.
Global investors acquired a net US$691 million worth of Taiwanese equities this week, after buying US$3.7 billion of shares last month, according to Taiwan Stock Exchange figures.
ADVANCED: Previously, Taiwanese chip companies were restricted from building overseas fabs with technology less than two generations behind domestic factories Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), a major chip supplier to Nvidia Corp, would no longer be restricted from investing in next-generation 2-nanometer chip production in the US, the Ministry of Economic Affairs said yesterday. However, the ministry added that the world’s biggest contract chipmaker would not be making any reckless decisions, given the weight of its up to US$30 billion investment. To safeguard Taiwan’s chip technology advantages, the government has barred local chipmakers from making chips using more advanced technologies at their overseas factories, in China particularly. Chipmakers were previously only allowed to produce chips using less advanced technologies, specifically
The New Taiwan dollar is on the verge of overtaking the yuan as Asia’s best carry-trade target given its lower risk of interest-rate and currency volatility. A strategy of borrowing the New Taiwan dollar to invest in higher-yielding alternatives has generated the second-highest return over the past month among Asian currencies behind the yuan, based on the Sharpe ratio that measures risk-adjusted relative returns. The New Taiwan dollar may soon replace its Chinese peer as the region’s favored carry trade tool, analysts say, citing Beijing’s efforts to support the yuan that can create wild swings in borrowing costs. In contrast,
TARIFF SURGE: The strong performance could be attributed to the growing artificial intelligence device market and mass orders ahead of potential US tariffs, analysts said The combined revenue of companies listed on the Taiwan Stock Exchange and the Taipei Exchange for the whole of last year totaled NT$44.66 trillion (US$1.35 trillion), up 12.8 percent year-on-year and hit a record high, data compiled by investment consulting firm CMoney showed on Saturday. The result came after listed firms reported a 23.92 percent annual increase in combined revenue for last month at NT$4.1 trillion, the second-highest for the month of December on record, and posted a 15.63 percent rise in combined revenue for the December quarter at NT$12.25 billion, the highest quarterly figure ever, the data showed. Analysts attributed the
Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) quarterly sales topped estimates, reinforcing investor hopes that the torrid pace of artificial intelligence (AI) hardware spending would extend into this year. The go-to chipmaker for Nvidia Corp and Apple Inc reported a 39 percent rise in December-quarter revenue to NT$868.5 billion (US$26.35 billion), based on calculations from monthly disclosures. That compared with an average estimate of NT$854.7 billion. The strong showing from Taiwan’s largest company bolsters expectations that big tech companies from Alphabet Inc to Microsoft Corp would continue to build and upgrade datacenters at a rapid clip to propel AI development. Growth accelerated for
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