The Taiwan dollar rose to a one-week closing high on Monday, fuelled by foreign fund inflows on the back of a climbing stock market, but trade was thin as investors kept a wary eye on corporate results due out this week. The Taiwan dollar rose to an intraday high of T$33.651, but later pared some of those gains to close the session at T$33.697, its strongest close since April 7.
It was stronger than Fridays close of T$33.795. "Trade was thin today because of the Easter holiday in some markets and because some people chose to watch before companies release their results this week and next," said a dealer in Taipei. "Foreign fund inflows helped the Taiwan dollar, and the central bank didnt seem like it did much to pull back gains today."
Volume on the main Taipei Forex Inc exchange was thin at $753 million, but higher than Fridays $645 million and off the billion dollar mark usually seen on most trading days. Dealers said many investors chose to stay on the sidelines as many companies in Taiwan and the United States are due to release details of their earnings in the next couple of weeks, and were waiting for greater clarity before plunging into the market.
"Were probably going to see the Taiwan dollar trade at around T$33.600 to T$33.900 to the US dollar," said another dealer. "The central bank is unlikely to allow any large fluctuations." The central bank keeps the Taiwan dollar in a managed float, and sometimes intervenes in the foreign exchange market to temper any fluctuations it deems excessive.
Local trade also took its cue from the offshore non-deliverable forwards (NDF) market. Six-month NDFs were quoted at -0.520/-0.460, compared with -0.460/-0.400 in early trade, indicating investors expect the Taiwan dollar to strengthen by a higher degree in half a year. On the smaller Cosmos exchange, the Taiwan dollar also closed stronger at T$33.685 compared to Fridays close of T$33.785.