The New Taiwan dollar surged to a 21-month high against the greenback yesterday to close at NT$31.688, but pared some gains as large purchase orders lifted the greenback from a trough shortly before the close.
The NT dollar rose NT$0.196, a strong showing for the second day in a row that was largely a result of foreign investors' inward remittances for stock purchases and heavy selling pressure on the US dollar from exporters, dealers said.
Turnover yesterday was active, totaling US$1.359 billion at the Taipei Foreign Exchange, down from US$1.481 billion on Tuesday. The US dollar traded at between NT$31.6340 and NT$31.9300, a range of nearly NT$0.3.
A series of lackluster economic indicators combined with recent US market tumbles triggered a selling spree of the US currency, dealers said.
They also said that as the US Federal Reserve is expected to continue cutting rates to stave off a recession, anticipation for a weak greenback kept potential dollar buyers such as importers waiting on the sidelines for better deals.
"The Central Bank has intervened very little since the market resumed trading after the Lunar New Year holidays," said a dealer at a state-owned bank who wished to remain anonymous. "Without substantial demand to bolster its fall, the greenback is likely to hit NT$31.500 soon."
Over the last two trading days, the NT dollar has appreciated NT$0.322, or 1 percent, against the greenback. Compared with the 7 percent gain it posted against the US dollar for the whole of last year, the 1 percent rise over two trading days was a sharp increase.
Dealers also said that since the NT dollar's performance had lagged behind other Asian currencies in climbing against the dollar, traders saw the latest jump as a delayed catch-up.
The NT dollar should gain to NT$31.5 per US dollar by the end of the year, according to the median estimate of 23 analysts surveyed by Bloomberg News last month.
Foreign investors registered net stock purchases of NT$5.218 billion on the local bourse yesterday, following net sales of NT$3.637 billion on Tuesday.
The TAIEX slipped 2.05 points, or 0.04 percent, to 7,550.55, with turnover totaling NT$99.134 billion, down from NT$112.748 billion on the previous day, the Taiwan Stock Exchange's tallies showed.
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