Taiwan’s Dollar Surges as Exporters Repatriate Profits Back Home

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Taiwan’s Dollar Surges as Exporters Repatriate Profits Back HomeThe Taiwanese dollar rose to its highest level in seven weeks as traders speculated that exporters brought back proceeds of overseas sales at the end of the month, while foreign funds purchased local shares.

The Taiwan dollar surged 0.1 percent to close at NT$30.128 versus the greenback, after earlier accelerating to NT$30.030, its highest point since April 11. The Taiwanese dollar has surged 0.4 percent this month, its second consecutive month of gains.

Foreign investors bought a net $468 million of stocks this week, increasing the total net inflows this month to $1.3 billion. The local Taiex index of equities ended the day at its strongest level in three years, before declining 0.1 percent.

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“The Taiwan dollar is usually stronger near the month-end as exporters sell foreign currencies,” Forest Chen, an economist at Ta Chong Bank Ltd in Taipei, told Bloomberg. Chen forecasted that the currency will rally past the 30 mark next month as foreign investors buy more local stocks and exporters bring back their profits home.

The Taiwan dollar’s one-month implied volatility, which measures the expected shifts in the exchange rate used to assign prices to options, plunged 0.03 percentage point, or three basis points, to 3.01 percent. The 1-month non-deliverable forward contracts surged 0.5 percent to NT$29.968, the largest advance since April 8. Yield on the 1.5 percent Treasuries that mature in March 2024 plunged two basis points to stand at 1.49 percent.

The India’s rupee also plunged on speculation that importers rushed to buy dollars in order to pay up their offshore obligations. The rupee fell 0.2 percent to trade at 59.0350 against the dollar at the close in Mumbai. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com