Local central bank bolsters US dollar finishing day higher on Taipei forex
CNATAIPEI--The U.S. dollar rose against the Taiwan dollar Tuesday, gaining NT$0.003 to close at NT$29.632 as the local central bank intervened to help the greenback reverse its earlier losses toward the end of the session, dealers said.
September 25, 2013, 12:08 am TWN
After the losses suffered by the U.S. dollar against the Taiwan dollar to send the greenback to a more than four-month low a session earlier, concerns over Taiwan's global competitiveness prompted the central bank to step in again to slow the pace of the Taiwan dollar's appreciation, the dealers said.
The weakness of the South Korean won against the U.S. dollar also gave the central bank a strong hint for intervention as the falling won gave Seoul an edge to compete with Taipei in the global market, they said.
The greenback opened at the day's high of NT$29.660 and moved to a low of NT$29.535 before rebounding. Turnover totaled US$837 million during the trading session.
The U.S. dollar staged a mild technical rebound soon after the local foreign exchange market opened, but selling re-emerged as traders witnessed foreign institutional investors continuing to buy local shares, the dealers said.
Foreign investors moved more funds into the region after the U.S. Federal Reserve surprised the market by leaving its monthly US$85 billion bond-buying program intact in its Sept. 17-18 policymaking meeting, they said.
In the local bourse, foreign investors served as net buyers of NT$5.68 billion (US$192 million)-worth of local shares.
However, after the U.S. dollar trended lower to near the NT$29.500 mark, the central bank's intervention became more visible, leading many traders to believe the central bank will maintain the greenback above NT$29.500 in the short term, the dealers said.
The falling won prompted the central bank to prop up the greenback amid fears that Taiwan would lose its competitive edge with its currency gaining too rapidly against the U.S. dollar, they said.
The won fell against the U.S. dollar during Tuesday's session amid concerns that the Bank of Korea would intervene to drag down the value of its currency.