US dollar closes lower on Taipei forex

Stronger service sector activity in the United States reported overnight also prompted traders to think more positively about the global economy and encouraged them to move funds out of the U.S. dollar and into the New Taiwan dollar, they said.

Again, however, the losses suffered by the U.S. dollar were partly offset by intervention by Taiwan's central bank, which bought into the greenback to slow down the pace of the New Taiwan dollar's appreciation, they added.

The greenback opened at the day's high of NT$29.720, and moved to an early low of NT$29.606 before rebounding. Turnover totaled US$627 million during the trading session.

The U.S dollar extended its losses against the New Taiwan dollar soon after the local foreign exchange market opened as shares on the Taiwan Stock Exchange extended their momentum, reflecting a record high posted by the Dow Jones Industrial Average overnight, dealers said.

Foreign institutional investors bought a net NT$2.18 billion in local shares to help the benchmark weighted index close up 0.22 percent at 7,950.30.

Optimism toward the world's economic fundamentals also placed more downward pressure on the U.S. dollar after the U.S. Institute for Supply Management's monthly index on the service sector rose to 56 in February, up from 55.2 in January.

The February reading was also better than the 55.4 expected by the market, which drove traders to exit the U.S. dollar as they became more willing to hold the New Taiwan dollar, dealers said.

In addition, a rising South Korean won was used by traders here as a strong lead to buy into the local currency throughout the trading session, they said.

Turnover remained moderate as many traders remained on the sidelines, waiting for the outcome of the European Central Bank's policymaking meeting scheduled for today, dealers said.

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