Taiwan Dollar Rises for Sixth Day on Inflows Amid Emerging Rally

  • Tolerance for gains may have increased as won rose: economist
  • Foreign funds have pumped $1.2 bln into local shares in March

Taiwan’s dollar strengthened for a sixth day, the longest run in almost a year, as the central bank appeared more tolerant of gains amid stock inflows and a rally in emerging-market assets.

The currency closed up 0.3 percent at NT$33.010 against the greenback after touching a three-month high of NT$32.690, according to prices from Taipei Forex Inc. The island’s dollar advanced 1.2 percent last week, the most since September 2012.

Foreign funds pumped $182 million into Taiwanese shares on Monday, taking inflows this month to $1.2 billion, as U.S. data showing an increase in non-farm payrolls was offset by a drop in wages and supported speculation the Federal Reserve will go slowly in raising interest rates. Taiwan’s central bank, which routinely intervenes to weaken its currency, allowed the gains last week as the won rallied 2.8 percent. The island’s exporters compete with their South Korean exporters to sell automobiles and electronics.

“Though the jobs data was quite OK, the market thinks the Fed won’t dare raise rates now, so funds are moving back to emerging markets," said Woods Chen, an economist at Ta Chong Bank Ltd. in Taipei. “The Taiwan central bank may have become more tolerant of currency gains because the won has also appreciated.”

The island’s dollar may rise to NT$32.5 to NT$32 against the greenback by mid-April before weakening as investors reassess the prospects of U.S. tightening and take profits on risky assets, Chen said.

Taiwan’s dollar gained Monday as foreign funds were still entering to purchase stocks, while state-backed lenders were buying the dollar at around NT$32.7, according to three currency traders who asked not to be identified. The island’s shares have attracted a lot of offshore investment as Taiwan’s firms are in relatively good financial health and the currency is stable, Yeh Hung-Ju, a fund manager at JPMorgan Asset Management in Taipei, said in a statement Monday.

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