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US dollar sheds NT$0.014 to close at NT$29.171

TAIPEI -- The U.S. dollar fell against the New Taiwan dollar Friday, shedding NT$0.014 to close at NT$29.171 as large foreign institutional buying in the local bourse boosted demand for the local unit, dealers said.

Optimism toward the Asian economy on the back of improving manufacturing activity in China also encouraged traders in the region to raise their holdings in regional currencies, they said.

However, buying in the New Taiwan dollar was limited as the local central bank stepped in, as it has done recently, to slow down the pace of the currency's appreciation by the end of the session, they added.

The greenback opened at the day's high of NT$29.186, and moved to an early low of NT$29.118 before rebounding. Turnover totaled US$612 million during the trading session.

The U.S. currency trended lower against the New Taiwan dollar soon after the local foreign exchange market opened as traders here took cues from a rebound on the Taiwan Stock Exchange, dealers said.

With momentum in the local bourse accelerating due to strong buying interest from foreign investors, downward pressure on the U.S. dollar increased until the central bank's intervention, they said.

The benchmark weighted index closed up 3.09 percent at the day's high of 7,326.01 after foreign institutional investors served as net buyers of NT$12.43 billion (US$426 million) worth of local shares.

Meanwhile, after HSBC reported Thursday China's manufacturing purchasing managers' index for November expanded to more than 50 for the first time in 13 months, traders in the region believed the regional economy has been picking up, dealers said.

Under such favorable circumstances, traders have become more willing to hold regional currencies, including the New Taiwan dollar, they said.

Despite the gains posted by the local unit, many traders remained cautious to keep turnover moderate ahead of a meeting scheduled by European finance ministers for Monday to discuss an aid package to debt-ridden Greece, dealers said.

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