US dollar up to NT$29.542 on Taipei forex on hopes of Fed liquidity
CNATAIPEI--The U.S. dollar rose against the New Taiwan dollar Tuesday, gaining NT$0.006 to close at NT$29.542 after Taiwan's central bank intervened by the end of the session to help the greenback recover earlier losses, dealers said.
October 9, 2013, 12:07 am TWN
Before the central bank moved into the market, the U.S. dollar remained weaker against the New Taiwan dollar as funds continued to flow into Asia on expectations that the U.S. Federal Reserve will continue to pump liquidity into the market, they said.
The greenback opened at NT$29.550, and ranged between 29.340 and 29.559. Turnover totaled US$714 million during the trading session.
The U.S. dollar opened higher on a mild technical rebound, but soon turned weaker against the New Taiwan dollar as traders here took hints from the further flow of foreign funds into the region, dealers said.
Many traders at home and abroad believe that the Fed will postpone an exit from its monthly US$85 billion bond buying program because of the U.S. government shutdown and worries over Washington's looming debt ceiling battle, they said.
The U.S. central bank left its quantitative easing measures unchanged at its last policymaking meeting on Sept. 17-18, and many traders now see the Fed taking the same position at its next meeting scheduled for later in the month, dealers said.
With the Fed unlikely to reduce liquidity, dealers said, foreign investors are expected to keep moving their funds into the region to further lift the value of regional currencies, including the New Taiwan dollar.
Foreign institutional buying in the local market on Tuesday also boosted demand for the New Taiwan dollar, dealers said.
Foreign institutional investors were net buyers of NT$2.70 billion (US$91.4 million) in local shares, sending the weighted index on the Taiwan stock exchange up 0.50 percent at the close.
As it has in recent sessions, Taiwan's central bank stepped in late in Tuesday's foreign exchange market trading session to push the U.S. dollar above NT$29.50, a level the market believes the bank wants to maintain to preserve the competitiveness of Taiwan's exports, dealers said.