As yuan firms, US dollar slips to NT$30.302 in Taipei
March 8, 2014, 12:00 am TWN
TAIPEI -- The U.S. dollar fell against the New Taiwan dollar Friday, shedding NT$0.021 to close at NT$30.302 as the local currency rode the wave of an uptrend among other units in the region, dealers said.
A stronger Chinese yuan against the U.S. dollar after a hike in the yuan's reference rate by the People's Bank of China (PBOC) helped to increase the weakness of the greenback in the local foreign exchange market, the dealers said.
Continued buying by foreign institutional investors in the local market also boosted demand for the New Taiwan dollar and placed further downward pressure on the U.S. dollar, they said.
However, the U.S. currency recouped most of its earlier losses at the close as the local central bank intervened in the latter part of the session to slow the pace of the New Taiwan dollar's appreciation, they said.
The greenback opened at NT$30.323 and moved to a low of NT$30.238 before rebounding. Turnover totaled US$584 million during the trading session.
The U.S. dollar opened flat, but soon fell into negative territory as traders here were enticed by the strength of the yuan to raise their New Taiwan dollar holdings, the dealers said.
Yuan Posted Largest Gains Since Jan. 24
The yuan's gains resulted from a move by the PBOC to raise the reference rate against the U.S. dollar by 0.08 percent, the largest hike since Jan. 24, which prompted local traders to think that the Chinese government will tolerate a wider upward swing of its currency, they said.
Other regional currencies, such as the South Korean won, the Indonesian rupiah and the Indian rupee, moved higher as foreign funds continued flowing into the region amid concerns over the U.S. economy after Washington's recent disappointing economic data, the dealers said.
In the local market, foreign institutional investors bought a net NT$12.64 billion (US$417 million)-worth of shares, serving as factors that added to the weakness of the U.S. dollar, they said.
The local central bank continued its efforts to stem the losses suffered by the U.S. dollar, and the intervention was more visible after the greenback fell below the NT$30.30 mark, the dealers said.
Despite the central bank's presence, turnover in the local foreign exchange market remained moderate, as many traders stayed on the sidelines, waiting for the release of the U.S. February nonfarm payroll data due later in the day, they said.