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Central bank action forces down greenback

TAIPEI -- The U.S. dollar fell against the New Taiwan dollar yesterday, shedding NT$0.02 to close at NT$29.368 as further intervention by Taiwan's central bank helped the greenback recoup most of its earlier losses by the end of the session, dealers said.

The central bank's moves demonstrated that it hopes to keep the U.S. dollar above the NT$29.30 mark against the Taiwan dollar in a market awash with liquidity supporting the local currency, they said.

The U.S. unit opened at the day's high of NT$29.390 and then moved to an early low of NT$29.210 before rebounding. Turnover totaled US$841 million during the trading session.

Before the central bank stepped in, the U.S. dollar had fallen sharply against the Taiwan dollar as traders took cues from a rising euro, dealers said.

The strength of the euro, which hit a two-month high against the U.S. dollar in New York overnight, reflected eased concerns over the debt problems in the eurozone after the European Central Bank (ECB) reiterated it will preserve the common currency, dealers said.

After the latest policymaking meeting held Thursday, ECB President Mario Draghi said his bank is ready to buy government bonds from debt-ridden countries in the region whenever they ask the bank to do so.

Draghi repeated at a news conference that the euro is “irreversible,” an attempt to show the ECB's determination to take on the financial crisis in the eurozone and mitigate fears over the demise of the currency, dealers said.

The latest ECB commitment gave a boost to most currencies in Asia, including the Taiwan dollar, as traders in the region were betting the regional currencies will trend higher in the near future as the impact of Europe's debt problems fade, they said.

Market sentiment was tempered, however, by a worse-than-expected report on the number of people who filed for unemployment benefits for the first time in the United States, dealers said.

Many traders were anxiously waiting for the release of U.S. jobs data for September due later Friday, they said.

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