US dollar closes higher at NT$30.061 on Taipei forex
August 8, 2014, 12:00 am TWN
TAIPEI--The U.S. dollar rose against the Taiwan dollar Thursday, gaining NT$0.005 to close at the day's high of NT$30.061 after moving only slightly in a quiet session and recovering from earlier losses, dealers said.
As the market had widely anticipated, the local central bank bought into the U.S. dollar in the latter part of the session, with the bank taking cues from a falling South Korean won to boost the U.S. dollar and make the Taiwan dollar cheaper in a bid to strengthen Taiwan's exports, the dealers said.
The greenback opened at NT$30.056 and moved to a low of NT$29.880 before rebounding. Turnover totaled US$553 million during the trading session.
After opening flat, the U.S. dollar soon fell into the red as traders were encouraged by the strength of the Chinese yuan to raise their holdings in the Taiwan dollar, the dealers said.
After the People's Bank of China hiked the yuan's reference rate against the U.S. dollar, the Chinese currency rose 0.11 percent against the greenback at one point, which served as an indication to traders here to buy into the Taiwan dollar for most of the session, the dealers said.
The stronger yuan also resulted from market expectations that China will report a year-on-year 7 percent increase in its exports for July, indicating that the second-largest economy in the world continues to steam ahead, they added.
Before the local central bank's intervention, the losses suffered by the U.S. dollar against the Taiwan dollar were capped by foreign institutional selling in the local market, which lowered demand for the local currency to some extent, the dealers said.
Foreign institutional investors served as net sellers of NT$1.40 billion (US$46.57 million)-worth of local shares to drag down the weighted index on the Taiwan Stock Exchange by 0.13 percent at 9,131.44 by the close.
After witnessing the won falling against the U.S. dollar, the local central bank stepped in to help the greenback rise back to NT$30, a level the market believes the bank wants to maintain to allow Taiwanese exporters an edge in their competition with South Korean rivals, the dealers said.