Greenback closes higher at NT$30.052 on Taipei forex
August 22, 2014, 12:04 am TWN
TAIPEI, Taiwan -- The U.S. dollar rose against the Taiwan dollar Thursday, gaining NT$0.005 to close at NT$30.052 on thin trade amid caution about the possibility that the U.S. Federal Reserve will raise its key interest rates sooner than the market has anticipated, dealers said.
The local central bank's further intervention in the late session helped the U.S. dollar recoup its earlier losses in a bid to protect Taiwan's exports in the global market, the dealers said.
It was the fourth consecutive session in which the U.S. dollar had closed above the previous close due to the local central bank's buying, they added.
The greenback opened at the day's high of NT$30.055 and moved to a low of NT$29.970 before rebounding. Turnover totaled US$574 million during the trading session.
The U.S. dollar opened higher on follow-through buying but soon fell into negative territory as traders took cues from foreign institutional buying in the local market to pick up the Taiwan dollar, the dealers said.
Foreign institutional investors served as net buyers of NT$1.74 billion (US$57.90 million)-worth of local shares, boosting demand for the Taiwan dollar and placing downward pressure on the U.S. dollar, they said.
However, the local central bank was influenced by the weakness of other regional currencies such as the South Korean won and the Chinese yuan, which largely trended lower amid fears over an interest rate hike by the U.S. Fed, prompting it to buy into the U.S. dollar, the dealers said.
Concerns over a rate hike cycle have been raised by the minutes of the Fed's latest policymaking meeting, which indicated that the U.S. central bank could raise interest rates sooner than the market has expected, prompting traders to bet that a hike will take place next year, they said.
Due to the expectations of a rate hike, traders moved their funds into U.S. dollar assets from non-greenback assets, which dragged down demand for the currencies in the region, the dealers said.