Feb. 8 (Bloomberg) -- Taiwan’s dollar rose to a 13-year high as foreign funds pumped money into the island’s stocks to profit from the improving outlook for economic growth.
The currency strengthened beyond NT$29 for the first time since 1997 before surrendering the bulk of its gains in the final minutes of trading as the central bank intervened to curb appreciation to support exporters, according to two traders familiar with its operations. Overseas investors bought $64 million more Taiwanese stocks than they sold today after purchasing a net $3.4 billion this year through Jan. 28, stock exchange data show.
“What is clear from the overall trend is that the Taiwan dollar is still on a path of appreciation,” said Perry Kojodjojo, a currency strategist at HSBC Holdings Plc in Hong Kong. “Flows going into Taiwan are very strong.”
Taiwan’s dollar advanced 0.1 percent to NT$29.16 against its U.S. counterpart as of the 4 p.m. close local time, according to Taipei Forex Inc. The currency earlier reached NT$28.89, the strongest level since October 1997. It has rallied 4.1 percent this year as the benchmark Taiex index advanced 1.5 percent.
The central bank has bought the U.S. dollar near the close of trading regularly since April to check gains in the local currency, according to traders who asked not to be identified because policy makers don’t usually disclose such details.
The administration raised the island’s 2011 growth forecast to 5.03 percent from 4.51 percent on Jan. 31. It estimated 2010 GDP growth at 10.47 percent.
Bonds declined. The yield on the 1.125 percent note due September 2020 increased four basis points to 1.47 percent, the biggest daily rise this year, according to Gretai Securities Market. A basis point is 0.01 percentage point.
To contact the editor responsible for this story: Sandy Hendry at email@example.com.