Greenback falls on Taipei forex
January 1, 2014, 12:15 am TWN
Taipei--The U.S. dollar fell against the Taiwan dollar Tuesday, shedding NT$0.08 to end at NT$29.950 as exporters rushed to buy into the local currency to close their books at the end of the year, dealers said.
The strength of the Chinese yuan, the South Koran won, the Japanese yen and other regional currencies added downward pressure on the U.S. dollar throughout the session, they said.
The local central bank stepped in to prop up the U.S. dollar to slow down the pace of appreciation for the Taiwan dollar in a bid to boost competitiveness for the export-oriented country, they said.
Tuesday was the first time the U.S. dollar fell below the NT$30.00 mark since Dec. 20, when the currency finished at NT$29.980.
The greenback opened at the day's high of NT$30.030, and moved to a low of NT$29.765 before rebounding. Turnover totaled US$693 million during the trading session.
After opening flat, the U.S. dollar saw selling emerge to drive it below the previous closing level as local exporters dumped their greenback holdings in exchange for the Taiwan dollar to close their books on the final day of 2013, dealers said.
Selling by exporters also came on the back of rising seasonal fund demands due to the end of the year, they said.
Foreign banks also stood on the sell side for the U.S. dollar as they took cues from gains posted by other regional currencies, which staged a strong technical rebound after a recent slump, dealers said.
A rising yuan in particular served as a strong indication for traders to dump their U.S. dollars after the People's Bank of China (PBOC) raised the reference rate for the yuan in exchange for the greenback by 55 basis points, they said.
The PBOC move suggested that Chinese authorities were willing to allow the yuan to trade in a wider range, indicting the possibility that the currency will appreciate further against the U.S. dollar in the future, they added.
The U.S. dollar fell below the NT$30 level in the morning session, prompting the local central bank to enter the trading floor immediately to help the greenback recoup most of its earlier losses, dealers said.