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US dollar up at NT$30.159 in Taipei

TAIPEI--The U.S. dollar rose against the New Taiwan dollar Tuesday, gaining NT$0.047 to close at the day's high of NT$30.159 as the local central bank continued its efforts to prop up the greenback, dealers said.

The central bank's intervention offset the impact from a rising Chinese yuan after the People's Bank of China (PBOC) raised the reference rate for the yuan in exchange for the U.S. dollar, the dealers said.

Despite the central bank's buying in the U.S. dollar, turnover in the local foreign exchange market remained moderate as many traders stayed on the sidelines ahead of U.S. retail sales data for December, they added.

The greenback opened at NT$30.120 and moved to a low of NT$29.960 before rebounding. Turnover totaled US$678 million during the trading session.

The U.S. dollar opened higher on a mild technical rebound from a slump seen a session earlier, but traders shifted to the sell side immediately after taking cues from the move by the PBOC to raise the yuan's reference rate, the dealers said.

The Chinese central bank hiked the yuan's reference rate to 6.0930 yuan against the U.S. dollar, the highest level since China launched its foreign exchange reform in July 2005, indicating that the Chinese authorities will allow the yuan more room to appreciate.

The hike in the reference rate boosted the yuan to a 20-year high, which prompted traders to raise their holdings in the New Taiwan dollar and even pushed down the U.S. dollar below the NT$30 mark at one point, the dealers said.

After witnessing the greenback falling to the day's low, the local central bank's buying in the U.S. dollar's value became more visible, vaulting the currency back to end above the NT$30 level at the end of the session, they said.

The local central bank is expected to continue its intervention at a time when many major business leaders in Taiwan have urged the bank to depreciate the local currency further in a bid to boost the country's exports, they added.

The dealers said traders were waiting for the December retail sales due later in the day for more clues about how the U.S. Federal Reserve will further scale back its monthly stimulus program.

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