Asian currencies have risen, led by Taiwan's Dollar on speculation that the region's wide interest rate advantage over the US will attract overseas investors. Alongside the Taiwan Dollar, the Indonesian Rupiah, Indian Rupee and the Philippine Peso have risen as asian stock markets climbed on the belief that earnings are able to rise despite the economic recession in the US. Taiwan was the top performer among the rising Asian currencies, hitting its strongest in 21 months.
''It's mainly foreign fund inflows that's lifting the Taiwan dollar,'' said Henry Lin, a currency trader at Shin Kong Commercial Bank in Taipei.
''Taiwan's interest rates are already higher than those in the US, and there's some fund repatriation by local investors.''
In forex trading, The Taiwan dollar gained 0.4 percent to NT$31.521 against the US Dollar this afternoon in Taipei. It rose to NT$31.5 which is its highest level since May 2006. The Rupiah added 0.2 percent to 9,171, while the Philippine peso rose 0.6 percent to 40.580 pesos against the US Dollar. India's rupee gained for the first time in five days, adding 0.5 percent to 39.99 versus the US Dollar.
Taiwan's central bank increased its borrowing rate to 3.375 percent in December, while the US Federal Reserve has reduced borrowing costs to 3 percent. The main driver for the Taiwan dollar is the decline in US interest rates according to Barclays capital. The rising Asian currencies is the same occurence happening with the Australian Dollar. The wider the interest rate differential between two countries, the higher the advantage for the nation with a contractionary response.
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