The Taiwan dollar rallied for the seventh consecutive day, its longest advance since January 2012 following increased foreign investor inflows.
Offshore investors purchased a net of $2.5 billion of Taiwanese shares in March, up from a net outflow of $361 million the previous month. The Taiex index advanced its highest since June 2011. The currency was also helped by Federal Reserve Chair Janet Yellen’s comments on Tuesday that the U.S. economy will still require further stimulus, sending capital straight to emerging markets.
The Taiwanese dollar advanced 0.3 percent to trade at NT$30.420 versus the dollar as of 10:30 a.m. in Taiwan, based on data from Taipei Forex Inc. The currency has gained 0.8 percent in the past seven days and touched NT$30.410 on Wednesday morning, its highest level so far since March 20.
“Taiwan’s stocks have been quite strong, so equity inflows have given some support to the currency,” Cindy Yu, a Taipei-based economist at Fubon Commercial Bank told Bloomberg. “Yellen emphasized the economy still needs the support of loose monetary policy, so the U.S. dollar fell.”
The Taiwan’s manufacturing Purchasing Managers’ Index tumbled to 52.7 last month from 54.7 in February, revealed Markit Economics and HSBC Holdings on Wednesday. That is still above the mean point of 50 that shows expansion or contraction.
One-month implied volatility, which measures expected shifts in the exchange rate that is used to assign prices to options, plunged 0.06 percentage point, or six basis points, to 3.55 percent. Yield on the country’s 1 percent government bonds that mature in February 2019 remained slightly unchanged at 1.1015, based on data obtained from Gretai Securities Market. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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