Taiwan’s Dollar Surges as Foreign Investors Purchase More Local Stocks

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Taiwan’s Dollar Surges as Foreign Investors Purchase More Local StocksThe Taiwan’s dollar rose this week after global funds bought more local shares while China’s economy looked to be strengthening.

The Taiwan’s dollar accelerated 0.1 percent to NT$30.053 this week against the U.S. dollar. Foreign investors purchased a net $670 million worth of Taiwanese stocks this week, the biggest since April. The yuan and the Taiwan’s dollar both got a boost from data that showed that China’s exports grew faster than expected, pushing trade surplus to the highest level in 5 years.

“Funds continue to enter Taiwan and the yuan’s recovery boosted emerging-market currencies,” Andrew Tsai, an economist at KGI Securities in Taipei, spoke to Bloomberg. “The economy in China, the core support for emerging markets, is also showing signs of a rebound.”

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The Taiwan’s dollar one-month implied volatility, which measures the expected shifts in the exchange rate used to assign price to options, fell 0.31 percentage point, or 31 basis points since June 6 and 0.15 percentage point today, to stabilize at 2.75 percent.

The rand fell the most of emerging market currencies after rating agency Fitch Ratings Ltd downgraded South Africa’s debt rating from stable to negative. The rand slumped up to 1.3 percent to trade at 10.8070 a dollar, its lowest level since March 25.

The currency was trading 0.8 percent lower as of 4:21 p.m. trading in Johannesburg, making it the worst performer among the 16 major currencies monitored by Bloomberg. The South African currency has declined by 1.6 percent over the past week.

South Africa has been grappling with electricity shortages, demands for higher wages and industrial unrest, which is affecting economic growth. Fitch, in its downgrade, said that the weak rand has failed to boost exports. It revised South Africa’s credit outlook to BBB, the same as Brazil, Colombia and Russia. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Yashu Gola at yashu@forexminute.com