Taiwan’s Dollar Rallies Most Since 2009 Before iPhone 7 Releaseby
Island’s currency climbs as foreign funds snap up suppliers
Apple expected to unveil latest model at event today
The Taiwan dollar completed its biggest three-day gain in seven years as disappointing U.S. data weighed on the greenback and overseas funds bought into Apple Inc. suppliers before an expected unveiling of the iPhone 7 later Wednesday.
The local currency increased 0.6 percent to NT$31.24 per dollar at the 4 p.m. close, taking its advance this week to 1.5 percent. The Taiex index climbed 0.8 percent to its highest level since July 2015. Taiwan Semiconductor Manufacturing Co., a major Apple supplier, and Hon Hai Precision Industry Co., the main assembler of iPhones, are among the biggest gainers this week.
Global funds poured $588 million into Taiwan shares in the first two days of this week alone, the most among nine Asian markets tracked by Bloomberg. Stocks also rallied as traders reduced bets for higher U.S. borrowing costs this year in the wake of weaker-than-expected jobs and manufacturing data.
“Apple is going to launch the new iPhone tonight and Taiwanese suppliers are rallying” on better earnings prospects, said Michael On, president of Beyond Asset Management in Taipei. “This, together with receding expectations for higher U.S. interest rates, are spurring inflows into Taiwan stocks and the currency.”
TSMC rose 2.8 percent on Wednesday, extending this week’s rally to 5.4 percent, while the Taiex climbed 3 percent in the span, three times the pace of gains by the MSCI All-Country World Index.
Last week, Apple sent out invitations to the Sept. 7 event, with the tagline "See you on the 7th" prompting industry watchers to link it to the name of its new model. Apple hopes faster iPhones with significant camera improvements will prop up sales ahead of an expected larger overhaul in 2017 for the device’s 10th anniversary.
The surging currency threatens to stifle a tentative recovery in exports, a key driver of the island’s economy. The Taiwan dollar retreated from a one-year high last month amid speculation the central bank stepped in to curb appreciation.
Outbound shipments rose 1 percent in August from a year earlier, beating the median estimate for a 0.3 percent increase in a Bloomberg survey, data Wednesday showed. That compared with growth of 1.2 percent in July. A decline of 0.8 percent in imports left the island with a trade surplus of $3.99 billion.
Taiwan officials "will intervene to smoothen moves not to reverse fundamental market forces,” said Tim Condon, head of Asian research at ING Groep NV in Singapore. "The Taiwanese dollar will be heading much higher as inflows continue.”