The New Taiwan dollar rebounded from a three-year low yesterday as US stock gains bolstered demand for emerging-market assets.
The local currency strengthened the most this month, rising in tandem with most of the region’s currencies. The Standard & Poor’s 500 Index climbed 4.4 percent on Wednesday on speculation that US President Barack Obama’s stimulus plan would include a US$50 billion-plus program to stem foreclosures and inject capital into banks.
The NT dollar gained 0.3 percent to close at NT$33.55 versus the greenback yesterday, its steepest climb since Dec. 30, Taipei Forex Inc said.
Turnover reached US$644 million, down from USS$1.01 billion the previous day.
Earlier yesterday, the local currency touched NT$33.79, the lowest level since October 2005. Local financial markets are closed until Feb. 2 for the Lunar New Year holiday.
“US stock markets rallied overnight, and the Asian currencies are tracking that,” said Maya Pinto, an economist at IDEAglobal in Singapore.
“Even if there’s an improvement in these currencies, it’d be more of a short-term phenomenon. Our forecast is for Asian currencies to maintain a weak bias because the data is going to be very ugly in the region,” Pinto said.
Export orders, a guide to shipments in the next one to three months, are expected to drop a record 37 percent last month from a year earlier, economists forecast in a Bloomberg News survey.
Taiwan will release its data on export orders today. Overseas sales account for about 70 percent of Taiwan’s GDP.
The local currency and overseas sales may weaken after China reported its economy expanded at the slowest pace in seven years. GDP grew 6.8 percent in the fourth quarter from a year earlier, matching the median estimate in a Bloomberg News survey. China is Taiwan’s largest export market.
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
RSS