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Greenback increases NT$0.035 to close at NT$30.303

TAIPEI--The U.S. dollar rose against the New Taiwan dollar Tuesday, gaining NT$0.035 to close at the day's high of NT$30.303 on an improvement in regional manufacturing activity data in the U.S. for April, dealers said.

The weakness of the Chinese yuan against the U.S. dollar gave another boost to the greenback in the local foreign exchange market after the People's Bank of China (PBOC) lowered the yuan reference rate, the dealers said.

The greenback opened at NT$30.275 and moved to a low of NT$30.251 before rebounding. Turnover totaled US$572 million during the trading session.

The U.S. dollar opened higher against the New Taiwan dollar on follow-through buying after the Philadelphia Fed manufacturing index rose to a seven-month high in April.

Local traders have high hopes that the U.S. economy will continue to advance on the back of a further improvement in the country's economic data, which could prompt the U.S. central bank to end its bond-buying program sooner than later and boost the value of the greenback, the dealers said.

Local enterprises rushed to dump their New Taiwan dollar holdings by taking advantage of the strength of the U.S. dollar in the global market, they said. The U.S. dollar index, which tracks the greenback value against the currencies of the U.S.'s major trading partners, rose to a two-week high at one point.

The falling yuan added downward pressure on the New Taiwan dollar after the PBOC cut the yuan's reference rate, which ignited market speculation that the Chinese authorities want to use a cheaper currency to boost the country's exports and eventually lift the economy, the dealers said.

However, the gains posted by the U.S. dollar were capped at one point during the session as foreign institutional investors continued to serve as net buyers of NT$2.92 billion (US$96.36 million)-worth of local shares, they said.

It was the 22nd consecutive session in which foreign institutional investors had net buying in the local market.

In the latter part of the session, the local central bank stepped onto the trading floor to further prop up the greenback and boost the currency to the day's high at the close.

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