The Taiwan dollar firmed on Friday as foreign fund inflows persisted after a rise in local stocks and amid falling US interest rates, while exporters sold US dollars. The Taiwan dollar ended stronger at T$32.300 to the US dollar after opening flat from the previous close of T$32.352.
Volume on the main Taipei Forex Inc was moderate at US $932 million, lower than US $1.29 billion a day earlier. "There were some foreign fund inflows, but amounts weren't that huge. Exporters were in the market, but we saw importers buying US dollars at around T$32.3," said a dealer in Taipei.
"The central bank was in the market buying US dollars and that stopped the Taiwan dollar from firming too much." On Friday, foreign institutions became net buyers of Taiwan stocks for a third straight day by purchasing a net T$4.629 billion (US $143 million) in Taiwan stocks, which rose 2.96 percent.
Dealers said they expected the Taiwan dollar would have more room to firm in the long term as US rates continue to fall, while rates in Taiwan would likely rise or stay steady, narrowing the rate gap.
Exporters usually convert their US dollar earnings to Taiwan dollars to meet their cash needs, especially with the Lunar New Year starting on February 7. "There's bound to be more exporters in the market before the Lunar New Year break, so there is a likelihood the Taiwan dollar will firm towards T$32.2," another dealer said.
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