Taiwan Dollar Rallies Amid Inflows as Stocks Rise to 2007 High

Taiwan’s dollar gained, halting a three-day loss, as overseas investors’ stock purchases helped send the benchmark equity index to its highest close since 2007.

Global funds bought $452 million more Taiwanese shares than they sold Wednesday, adding to purchases Tuesday, when local markets reopened after the Lunar New Year holidays. The currency slipped 0.5 percent in two trading days before the holidays began on Feb. 18 on speculation the central bank increased intervention.

The currency’s move “is a reflection of foreign investors buying more than NT$10 billion of Taiwan’s stocks yesterday,” said Chu Yen-min, president of KGI Securities Investment Advisory in Taipei. “It tends to fall before the Chinese New Year so that exporters can repatriate their overseas earnings for more, but that factor is no longer there.”

Taiwan’s dollar rose 0.5 percent to close at NT$31.532 against the greenback, after jumping as much as 0.9 percent earlier, Taipei Forex Inc. prices show. One-month non-deliverable forwards climbed 1 percent, the most since September 2012, to NT$31.479, according to data compiled by Bloomberg.

The Taiex index of shares advanced 0.7 percent. The island’s stocks have attracted $5.1 billion this year, more than the combined inflows for India and Indonesia, data compiled by Bloomberg show.

Sovereign bonds advanced, with the yield on the 2025 notes falling two basis points, or 0.02 percentage point, to 1.599 percent in when-issued trading, Taipei Exchange prices show.

The central bank will sell NT$130 billion ($4.1 billion) of 364-day certificates of deposit March 4, an increase from the NT$120 billion offered each month since February 2014, as funds are returning to banks after the holidays, according to a statement Tuesday.

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