Taiwan Dollar Climbs to 11-Month High as Equity Inflows Quicken

  • High dividend yield is luring foreign investors: economist
  • Asian markets see inflows as Fed rate increase seen delayed

Taiwan’s dollar rose to the strongest level since August as foreign funds poured cash into local equities amid confidence the Federal Reserve will keep interest rates on hold.

Global funds have injected a net $1.4 billion into the territory’s stocks this week through Wednesday, the most among eight Asian markets tracked by Bloomberg. Developing-nation currencies are recovering this month after plunging in the aftermath of the U.K.’s vote to leave the European Union in June. Futures are now pricing in less than even odds of a Fed rate increase in 2016.

“The market thought that, after Brexit, funds would leave Europe and go to the U.S., but it seems some are entering emerging markets because U.S. rate hikes will be delayed," said Cary Ku, an economist at Jih Sun Securities Co. in Taipei. "Taiwan stocks’ higher yield also attracts foreign investors."

Taiwan’s dollar advanced 0.3 percent to close at NT$32.073 against the greenback, after earlier reaching NT$32.058, the strongest level since Aug. 13 last year, Taipei Forex Inc. prices show. The Taiex index of shares rose 0.1 percent to close at the highest level since July 2015. The gauge’s 4.13 percent dividend yield is the second-highest among benchmarks in Asia.

The central bank’s foreign-exchange operations do not show a bias for depreciation, it said in a statement on Wednesday in response to media reports. The U.S. put Taiwan on a watchlist for currency policies in April, arguing that the island mainly intervenes to block appreciation.

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