The Taiwanese dollar rose by more than 2%on another volatility day for the currency, since the sales of the Greenback tested the tolerance of the central bank compared to local currency strength.
The currency rose by up to $ 29.16 per US dollar on Tuesday in the largest one-day win since the beginning of May after it was more than 2% on Monday. The latest step came to 12%to win the local currency this year and made it the best performer in Asia.
According to two dealers who asked not to be identified when they were not justified to speak publicly, large foreign inflows and an important US dollar sale were seen by local exporters. The state banks bought the Greenback to smooth the liquidity of the market, they said.
The local currency has been enforced by a number of sharp fluctuations since last Friday when the central bank occurred after the decline of the US dollar after its profit. The authorities strive to prevent a sharp appreciation in order to reduce the pressure on life insurers.
While the exact reasons for the latest steps were unclear, the wild fluctuations in the Taiwan dollar in the last two trading sessions as domestic corporate insurers and exporters are prepared for the publication of their six months. The sharp slide, which would have closed the currency the lower Monday, would have helped local companies that many of the currency rally-to achieve better financial results.
“The Taiwanese dollar was had under strong value -added printing due to record trade surpluses, equity inflows and securing activities by Taiwanese life insurance companies,” wrote Khoon Goh, Head of Asia Research at Anz, in a note. Since the Central Bank TWD strategically approved in early May, they tried to manage the strength of the currency, ”he added.
Governor of the Central Bank, Yang Chin-Long Volatility At the last political meeting in June. The monetary authority said it would continue to promote the “orderly operation of the foreign exchange market” – a line that points out that the stability of the problem is one of its greatest concern.
The increase in the local currency occurs because foreign investors started local stocks in June and exporters would increase the turnover of the Greenback in relation to the concerns of the US currency. repatriation The island’s asset managers also played a role.
Causes have been built on a stronger Taiwanese dollar since the beginning of May Greatest one -day jump Since the 1980s. If the profits are uncontrolled, you can lead to insurers of paper losses for life insurers after they have been withdrawn on their foreign assets, the majority of the greenback.
“The type of interventions of the window decoration is seasonal and serves to pause the USD/TWD trend, but not to reverse,” said Fiona Lim, Senior Stratege at Malayan Banking BHD in Singapore. “As long as the wider US dollar decline continues, the sell-USD/TWD-on rally trade could continue.”
The currency couple are expected to swing in both directions, since the Taiwan dollar is caught between the speculations of central bank intervention and the weakness in the Greenback, added Lim.
A little more than a month ago, the central bank in the Taiwan strengthened its warning to domestic trading companies because of its currency purchases to maintain the stability of the local dollar. Last Week, It asked foreign investors to end betting on the local dollar, which was absorbed by stock markets.
