The New Taiwan dollar hit a more than 10-year intraday high yesterday when it broke the NT$30 benchmark against the US dollar, thanks largely to speculative selling pressure on the US currency amid continued capital inflows.
The NT dollar rocketed to NT$29.950 against the greenback in the morning session but pulled back later to pare early gains because of central bank intervention, dealers said.
The local currency closed 0.3 percent higher at NT$30.010 on the Taipei Forex Inc yesterday from NT$30.100 on Tuesday. The previous record level against the US dollar was set on Oct. 20, 1997, when it hit an intraday high of NT$29.700.
"The central bank intervened in the market to halt the NT dollar's fast appreciation. But it seems that the central bank is the only buyer of the US dollar for the moment," a local forex dealer, who requested anonymity, said in a telephone interview yesterday.
Foreign investors bought a net NT$1.23 billion in Taiwanese shares yesterday and have acquired a net NT$77.8 billion in local stocks in the days following the presidential election, the Taiwan Stock Exchange's tallies showed.
On the back of the capital inflows, the NT dollar has gained 1.77 percent this week, the biggest among major Asian currencies. But the NT dollar also rose because "the prospect of stronger ties with mainland China following the recent presidential election increased the attractiveness of the currency," Matt Robinson, a Sydney-based economist at Moody's Economy.com, wrote in a note yesterday.
The central bank has been under increasing pressure to combat the inflows of hot money because the appreciating local currency undercuts the competitiveness of exporters.
The central bank may extend intervention if exporters also rush to dump the US dollar aggressively once the NT dollar breaks the NT$30 level, the dealer said.
"The central bank will be monitoring the market to avoid volatility," he said.
Still, the NT dollar is facing uncertainty, with the central bank to announce its monetary policy at a quarterly meeting today.
Economists are divided on whether the central bank will persist with its gradual interest rate hikes to contain inflation in light of the recent deterioration in global economic and financial market conditions.
Moody's Economy.com predicted the central bank would leave interest rates on hold this week because economic growth appears to be of greater concern than inflation for the time being.
But economists at Citi Investment Research and the Polaris Research Institute forecast that the central bank would raise its rediscount rate by another 12.5 basis points today to 3.50 percent, following the 14th quarterly increase since October 2004.
A Chinese freighter that allegedly snapped an undersea cable linking Taiwan proper to Penghu County is suspected of being owned by a Chinese state-run company and had docked at the ports of Kaohsiung and Keelung for three months using different names. On Tuesday last week, the Togo-flagged freighter Hong Tai 58 (宏泰58號) and its Chinese crew were detained after the Taipei-Penghu No. 3 submarine cable was severed. When the Coast Guard Administration (CGA) first attempted to detain the ship on grounds of possible sabotage, its crew said the ship’s name was Hong Tai 168, although the Automatic Identification System (AIS)
An Akizuki-class destroyer last month made the first-ever solo transit of a Japan Maritime Self-Defense Force ship through the Taiwan Strait, Japanese government officials with knowledge of the matter said yesterday. The JS Akizuki carried out a north-to-south transit through the Taiwan Strait on Feb. 5 as it sailed to the South China Sea to participate in a joint exercise with US, Australian and Philippine forces that day. The Japanese destroyer JS Sazanami in September last year made the Japan Maritime Self-Defense Force’s first-ever transit through the Taiwan Strait, but it was joined by vessels from New Zealand and Australia,
CHANGE OF MIND: The Chinese crew at first showed a willingness to cooperate, but later regretted that when the ship arrived at the port and refused to enter Togolese Republic-registered Chinese freighter Hong Tai (宏泰號) and its crew have been detained on suspicion of deliberately damaging a submarine cable connecting Taiwan proper and Penghu County, the Coast Guard Administration said in a statement yesterday. The case would be subject to a “national security-level investigation” by the Tainan District Prosecutors’ Office, it added. The administration said that it had been monitoring the ship since 7:10pm on Saturday when it appeared to be loitering in waters about 6 nautical miles (11km) northwest of Tainan’s Chiang Chun Fishing Port, adding that the ship’s location was about 0.5 nautical miles north of the No.
SECURITY: The purpose for giving Hong Kong and Macau residents more lenient paths to permanent residency no longer applies due to China’s policies, a source said The government is considering removing an optional path to citizenship for residents from Hong Kong and Macau, and lengthening the terms for permanent residence eligibility, a source said yesterday. In a bid to prevent the Chinese Communist Party (CCP) from infiltrating Taiwan through immigration from Hong Kong and Macau, the government could amend immigration laws for residents of the territories who currently receive preferential treatment, an official familiar with the matter speaking on condition of anonymity said. The move was part of “national security-related legislative reform,” they added. Under the amendments, arrivals from the Chinese territories would have to reside in Taiwan for
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