US dollar finishing day higher on forex, slightly below NT$30
CNATAIPEI, Taiwan -- The U.S. dollar rose against the Taiwan dollar Thursday, gaining NT$0.10 to close at the day's high of NT$29.985 as the local central bank aggressively bought into the greenback, helping the unit recover its earlier losses, dealers said.
September 6, 2013, 12:02 am TWN
The central bank's buying in the U.S. dollar assuaged downward pressure on the unit, which weakened throughout most of the session as a result of further fund inflows into Taiwan, the dealers said.
The intervention by the central bank became more visible in particular after the South Korean won pulled back from its high for the day as the bank feared that Taiwan would lose its global competitiveness due to the Taiwan dollar's strength, they added.
The greenback opened at NT$29.885 and moved to a low of NT$29.705 before rebounding. Turnover totaled US$719 million during the trading session.
Ahead of the central bank's presence, the U.S. dollar continued a downtrend soon after the local foreign exchange market opened as traders dumped the currency, taking cues from a move by foreign investors to move more funds into Taiwan, the dealers said.
Riding on the wave of ample liquidity, foreign institutional investors kept picking up local large-cap stocks to cover their previous short positions, boosting demand for the Taiwan dollar, they said.
Foreign institutional investors served as net buyers of NT$9.75 billion (US$325 million)-worth of local shares to push the weighted index up 1.05 percent by the end of the session.
The early strength of the Taiwan dollar also reflected the initial gains posted by the won with an upbeat mood about the regional economy after China, the world's second-largest economy, reported stronger manufacturing activity for August, the dealers said.
A move by the People's Bank of China to raise the reference rate for the Chinese yuan in exchange for the U.S. dollar by 0.05 percent also gave a strong hint to traders here to buy into the Taiwan dollar before the local central bank's intervention, they said.