The Taiwan dollar reached a nearly six-week high on Friday, gaining on broad US dollar weakness that reflected uncertainty in the world's biggest economy and firming over the month as risky assets gained favour. The local currency ended at T$32.05 to the US dollar as the latter softened following downbeat data earlier in the week.
A central bank move to control market volatility held back gains in the Taiwan dollar on Friday, but the currency hit its highest close since June 21 and grew 0.71 percent over July as investors priced in downbeat economic data from overseas and toyed with risky assets.
A string of upbeat economic data or earnings reports from the United States, Taiwan's No 2 export destination, will support the Taiwan dollar as investors favour growth-linked assets. A wave of dismal data would have the opposite effect. The euro zone debt crisis could spread into the world financial system and affect Asian exports, including those from technology-led Taiwan, but strategists see this threat fading. Taiwan's currency will track any gains in the yuan as a proxy for the non-convertible Chinese unit because of the island's strong trade ties with China.
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