Local currency rallies NT$0.425 on influx of foreign funds

The local currency opened at the day's low of NT$33.658 against the greenback, but surged all the way along with the bullish performance of the local bourse, which saw its weighted share price index shoot up 6.74 percent or 378 points and witnessed a large over-buying position of NT$32.99 billion by foreign investors.

A total of US$3.84 billion changed hands during the entire trading session of the Taipei forex market, the highest single-day volume this year.

Officials with domestic forex banks, the weakening of the U.S. dollar in international forex markets caused major Asian currencies to surge, with the NT dollar, particularly, gaining steam for appreciation from the influx of foreign equity funds for investment in domestic bourse as well as from exporters' demand for local currency to meet cash needs at home at the end of the month.

The officials said that with qualified domestic institutional investors (QDIIs) of mainland China to be allowed to invest in the Taiwan stock market soon, both local stock and forex markets surged significantly. This, in turn, prompted international hot money to flow into the island to cash in on the bullish stock market performance.

During the trading session, the local currency once rallied as much as NT$0.6 against the greenback, causing the Central Bank of China (CBC) to step in to dampen the rally of the local unit. But the local currency still ended NT$0.425 higher than one day earlier, against the U.S. dollar.

Forex market analysts said that the local currency is expected to challenge a high of NT$33 against the U.S. dollar in the coming week. 

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