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Greenback closes lower to end at NT$29.750 in Taipei

TAIPEI -- The U.S. dollar fell against the Taiwan dollar Thursday, shedding NT$0.082 to close at NT$29.750 as the strength of other regional currencies, in particular the Chinese yuan and South Korean won, drove traders here to buy into the local unit, dealers said.

The local central bank stepped in again, late in the trading session, helping the greenback to recoup part of its earlier losses and remain above the NT$29.70 mark by the end of the session, dealers said.

The U.S. dollar opened at the day's high of NT$29.832, and moved to an early low of NT$29.665 before rebounding. Turnover totaled US$724 million during the trading session.

The U.S. currency lost momentum soon after the local foreign exchange market opened as investors took cues from the gains posted by the yuan and won, dealers said. Foreign banks and local exporters stood on the sell side, cutting their greenback positions, dealers said.

At one point, the yuan climbed to a 19-year record high after the People's Bank of China (PBOC) raised the reference rate for the Chinese unit.

The gains posted by the yuan also reflected expectations that the PBOC will soon widen the trading band for the unit to allow more flexibility for fluctuations, which could pave the way for appreciation of the yuan and encourage other regional units to rise, dealers said.

Last year, the PBOC doubled the band to 1 percent on either side of the yuan's daily reference rate.

Meanwhile, the won rose to a one-week high, also giving a strong indication to traders here to cut their U.S. dollar holdings in exchange for the New Taiwan dollar amid improved sentiment toward the regional economy, dealers said.

The optimism resulted mainly from South Korea's report of a first-quarter economic growth of 0.9 percent from the fourth quarter of last year when the growth was 0.3 percent, dealers said.

At home, foreign institutional investors continued to buy on the local market, picking up NT$5.52 billion (US$186 million) net worth of shares, which pushed up demand for the New Taiwan dollar, dealers said.

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