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New Taiwan dollar strengthens to NT$31.20 against greenback

Taiwan's dollar rose to the highest level since May 2005 on speculation overseas investors will buy more of the island's assets as its interest-rate advantage over the U.S. widens. Government bonds fell.
The currency gained for a sixth day after the Taipei-based China Times newspaper said the central bank will let the currency and borrowing costs rise to help curb inflation. Crude oil has risen 61 percent in the past year, increasing costs for companies such as China Airlines, Taiwan's biggest carrier.
"Foreign funds inflows are continuing," said Ernest Lee, a bond trader at Mega Securities Co. in Taipei. "Overseas investors may be buying bonds around the end of March when the central bank will raise interest rates."
The local dollar climbed 0.6 percent to NT$31.20 against the U.S. currency in Taiwan, the biggest gain since February 13, according to Taipei Forex Inc.
The Taiwan dollar's advance may help reduce inflation by cutting the cost of goods the island imports. Consumer prices rose 2.96 percent from a year earlier in January, the fifth month price gains exceeded 2 percent. The government needs to "pay attention to" price trends, Wu Chao-ming, a government statistics official, said February 5.
The central bank raised its benchmark rate to 3.375 percent at its most recent meeting in December, while the U.S. Federal Reserve has cut borrowing costs five times since September to 3 percent. Goldman Sachs Group Inc. said on Monday. Taiwan's policy makers may raise rates at their next quarterly policy meeting in March to rein in price increase.
Ten-year government bonds fel, pushing yields to the highest in a month on concern rising inflation will erode the purchasing power of their fixed payments. The yield on the benchmark 2-3/8 percent bond due September 2017 rose 1.4 basis points to 2.425 percent at the 1:30 p.m. close in Taipei, according to Gretai Securities Market, Taiwan's biggest exchange for bonds. The price fell 0.1186, or NT$119 per NT$100,000 face amount, to 99.5717.


Updated : 2021-05-08 00:54 GMT+08:00