(Bloomberg) -- The Taiwan dollar strengthened past 30 versus the greenback for the first time in 18 months.
The currency rose as much as 0.6% to 29.965 per dollar on Tuesday, and closed at 30.106 in Taipei. The Taiwan dollar has climbed about 3.4% in the second half as the best performer among the world's major currencies. Taiwan's financial markets will be shut Wednesday for the New Year holiday.
Taiwan's currency has been boosted by the most foreign equity inflows in Asia this year after India. Overseas investors have been heartened by Taiwan's success retaking some of the global technology supply chain amid trade tensions between the world's two largest economies.
“The Taiwan dollar has clearly been an outperformer in the second half,” said Eddie Cheung, an emerging markets strategist at Credit Agricole CIB. “We think it's driven by the market realization that it is emerging as a U.S.-China trade war winner. The growth turnaround has been rapid, and Taiwan seems to be gaining an early edge in the turn of the tech cycle.”
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Traders have speculated recently that Taiwan's central bank has been stepping into the market to slow the currency's advance. Central bank Governor Yang Chin-long said in December that the monetary authority would “smooth” the market when large inflows cause excessive volatility. Policy makers may want to curb more gains by the Taiwan dollar to protect exporters.
The benchmark Taiex stock gauge gained 23% this year, its best showing since 2009. A humming economy will keep adding momentum to local financial markets, analysts have said, and next month's presidential election won't slow that. The gauge closed 0.5% lower on Tuesday at 11,997.14 points.
--With assistance from Cindy Wang.
To contact Bloomberg News staff for this story: Philip Glamann in Shanghai at pglamann@bloomberg.net;Argin Chang in Taipei at achang153@bloomberg.net
To contact the editor responsible for this story: Sofia Horta e Costa at shortaecosta@bloomberg.net
©2020 Bloomberg L.P.
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