Taiwan Dollar Extends Gain After Strongest Close Since 2011
Taiwan Dollar Hits Strongest Since 2011 as Officials Allow Gain
(Bloomberg) -- The Taiwan dollar extended its winning streak on Tuesday, a day after it closed at the strongest level since 2011 amid speculation the local central bank will continue to loosen its grip on the rallying currency.
The advance builds on September’s 1.4% gain, one of the largest for major currencies versus the U.S. dollar. While for months Taiwan’s central bank stepped in daily to limit appreciation, its relatively hands-off approach recently is a sign that officials may allow further strengthening. The gains also come amid signs of solid economic growth, with data from exports to manufacturing showing expansion in August.
The central bank allowing appreciation “is justified based on fundamentals and the currency is not overvalued,” said Khoon Goh, head of Asia research at Australia and New Zealand Banking Group Ltd. “There is room for further slight appreciation into year-end, though there will likely be increased volatility heading into the U.S. election.”
The Taiwan dollar has been among the least volatile major exchange rates the past several months, even as foreign inflows into local technology stocks increased demand for the currency. It closed at 28.96 versus the greenback Tuesday, its strongest since September 2011, while the benchmark Taiex stock index advanced 1.2% to 12,704.23.
The head of Taiwan’s central bank said on Sept. 17 that the local dollar was “not strong” versus trade-weighted valuation metrics.
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