Taiwan Dollar Rises to 10-Month High as Stock Inflows Top Asia

  • Lower valuations are drawing foreign investors: fund manager
  • Bookmakers’ odds favor a win for “Remain” in U.K. vote

Taiwan’s dollar rose to the strongest level since August as foreign funds poured cash into local equities.

Global funds put $2.4 billion into Taipei-listed stocks this month through Wednesday, the most among eight Asian markets tracked by Bloomberg. Taiwan’s benchmark share gauge trades at 13.3 times projected earnings, versus a multiple of 15.4 on a measure of global equities. The U.K. votes Thursday on whether to remain part of the European Union.

"Foreign investors are buying Taiwan stocks because they’re cheaper," said Samson Tu, a fund manager at Uni-President Asset Management Corp. in Taipei. "The market’s expecting Britain to remain in the E.U., so haven assets like the U.S. dollar are falling."

Taiwan’s dollar advanced 0.2 percent to NT$32.158 as of 11:30 a.m. local time, after earlier reaching NT$32.150, the strongest level since Aug. 14, Taipei Forex Inc. prices show. The Taiex index of shares dropped 0.4 percent from Wednesday’s close, which was the highest since the end of March.

Asian currencies including Taiwan’s may halt gains if the U.K. plebiscite ends with a victory for “Remain”, as that’s been largely priced in, Tu said. Overseas investors are unlikely to hold onto Taiwanese shares in the longer term as weak exports and currency strength will weigh on earnings, he added.

Taiwan’s central bank has scaled back daily currency intervention since early April amid criticism from the U.S. Treasury Department. The monetary authority had been weakening the local exchange rate via state-backed banks in the last hour of trading. Since the island was put on a U.S. watchlist for currency policies in April, Taiwan’s dollar has fallen by less than 0.11 percent during that hour every day, compared with an average daily 0.6 percent slide in the year through March 31.

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