The Japanese yen dipped to a new low in more than one year against the Taiwan dollar at one point Thursday, attracting local consumers who rushed to pick up the Japanese currency, taking advantage of the depreciation, dealers said.
In the early morning session of Thursday, the yen fell below the NT$0.27-mark to NT$0.2691 against the Taiwan dollar at one point, a new low in one-and-a-half years, according to data released by Bank of Taiwan, the largest lender in the country.
The weakness of the yen came at a time when currency traders moved their funds out of the Japanese currency to other regional units amid eased concerns over geopolitical tensions, the dealers said.
They said the NT$0.27-mark was a psychological level for the yen so that after witnessing the currency falling below that level, selling in the Japanese unit intensified in the local foreign exchange market.
The weaker yen prompted many consumers to buy into the currency, which lent some support to the unit, helping it recoup some of its earlier losses but it still hovered around a more-than two-year low during the Thursday session, the dealers said.
According to Bank of Taiwan, its online banking platform has been jammed by rising demand for the yen since the beginning of this week. The dealers said that demand for the yen largely came from consumers planning to visit Japan, one of the most favored destinations among Taiwanese travelers.
Other banks in Taiwan, such as Mega International Commercial Bank, Bank SinoPac and E. Sun Commercial Bank, which have provided relatively better terms for yen purchases, also saw rising requests for yen purchases.
Due to reduced tension over the Korean peninsula and eased fears over a possible victory by a populist presidential candidate in France, currency traders developed a greater appetite for risk by raising their holdings in non-yen denominated currencies, such as the Taiwan dollar, the dealers said.
While the yen fell to a low against the U.S. dollar, the Taiwan dollar appreciated against the greenback by more than 7 percent so far this year, making the local currency the stronger one in the region.
Despite a lower yen, it is unlikely for budget air fares to Japan from Taiwan to go lower, since the number of flights between the two countries fell about 950 from a year earlier, which has boosted the average load factor to 86.8 percent from 77.2 percent, indicating tighter demand, according to statistics supplied by the Civil Aeronautics Administration.