US dollar up to NT$29.980 on Taipei forex
December 21, 2013, 12:07 am TWN
TAIPEI -- The U.S. dollar rose against the Taiwan dollar Friday, gaining NT$0.035 to close at NT$29.980 in line with other regional currencies following an announcement by the U.S. Federal Reserve that it will taper off its economic stimulus measures, dealers said.
The local central bank jumped into the market in the late session to further boost the U.S. dollar and speed up the pace of the Taiwan dollar's depreciation in a bid to make Taiwan-made products cheaper in the global market, the dealers said.
It was the ninth consecutive session in which the U.S. dollar had posted gains against the Taiwan dollar. Friday's closing level was the highest since Sept. 5, when the currency finished at NT$29.985.
The greenback opened at NT$29.980 and moved between NT$29.890 and NT$29.990 before the close. Turnover totaled US$715 million during the trading session.
The U.S. dollar extended its strength against the Taiwan dollar soon after the local foreign exchange opened as traders took cues from weakness in other regional currencies after the Fed's move, the dealers said.
After wrapping up a two-day policymaking meeting Wednesday, the Fed announced a scaling-back of its monthly bond-buying program to US$75 billion from US$85 billion, starting from January.
While it seems that the pace of the exit by the Fed is moderate, fears have been stirred up that foreign investors will move more and more of their funds into U.S. dollar assets, which could further depress the value of regional currencies, including the Taiwan dollar, the dealers said.
Foreign banks continued to stand on the buy side for the U.S. dollar by cutting their Taiwan dollar holdings on hopes of a further fund exodus resulting from the Fed's move, they said.
Local exporters, however, bought into the local currency with the year coming to an end, to assuage the impact of selling by foreign banks, they added.
With liquidity in the local market continuing to be depleted, it is possible for the U.S. dollar to challenge the NT$30.00 mark soon, the dealers said.