US dollar declines to NT$29.905 on Taipei forex
July 3, 2014, 12:05 am TWN
TAIPEI, Taiwan -- The U.S. dollar fell against the New Taiwan dollar Wednesday, shedding NT$0.030 to close at NT$29.905 as traders here were spurred by the strength of other regional currencies to raise their holdings in the local currency, dealers said.
The gains posted by regional currencies reflected growing confidence in the regional economy after several economies in the area reported that manufacturing activity expanded in June, they said.
Further foreign fund inflows into Taiwan's equity market added downward pressure on the U.S. dollar throughout the session before the local central bank stepped in to slow down the pace of the New Taiwan dollar's appreciation, dealers said.
The greenback opened at the day's high of NT$29.935 and moved to a low of NT$29.842 before rebounding. Turnover totaled US$470 million during the trading session.
After opening flat, the U.S. dollar soon fell into the red on the back of the gains seen in other regional currencies, in particular the South Korean won, which had risen 0.24 percent against its U.S. counterpart at one point, dealers said.
Buying interest in the currencies was sparked after China, the world's second largest economy, reported an expansion in factory output, further bolstering investor faith in the region's economic fundamentals.
China's official purchasing managers' index (PMI) hit a six-month high of 51.0 in June, up from 50.8 recorded in May. A separate PMI index prepared by HSBC put China's PMI in June at 50.7, compared with 49.4 in May.
HSBC's PMI for Taiwan rose to 54 in June from 52.4 from a month earlier, while the Taiwan-based Chung-Hua Institution for Economic Research said the country's PMI for June was 58.2, down slightly from 58.6 in May.
Any score over 50 indicates expansion.
At the same time, the net purchase of NT$7.95 billion (US$266 million) in shares by foreign institutional investors increased demand for the New Taiwan dollar and put added pressure on the greenback before the central bank intervened to prop up the U.S. dollar, dealers said.
Turnover remained thin Wednesday as traders were cautious ahead of a speech U.S. Federal Reserve Chairwoman Janet Yellen was set to deliver later in the day at the International Monetary Fund in Washington.
They were waiting to see if she would offer any more hints on the direction of the Fed's monetary policy, they said.