US dollar dips to NT$30.201 on FINI buying, South Korean won
April 17, 2014, 12:00 am TWN
TAIPEI--The U.S. dollar fell against the Taiwan dollar Wednesday, shedding NT$0.034 to close at NT$30.201 as foreign institutional investors (FINIs) kept buying into local shares to boost demand for the local currency, dealers said.
The strength of the South Korean won also placed downward pressure on the U.S. dollar in the local foreign exchange market before the local central bank stepped in to intervene, helping the U.S. currency recoup most of its earlier losses, they said.
The greenback opened at the day's high of NT$30.240, and moved to NT$30.110 before rebounding. Turnover totaled US$676 million during the trading session.
The U.S. dollar opened higher on follow-through buying from a session earlier, but selling emerged as traders were encouraged by further buying among foreign institutional investors in the local market to raise their Taiwan dollar holdings, dealers said.
Foreign institutional investors served as net buyers of NT$5.57 billion (US$184 million) worth of local shares on the Taiwan Stock Exchange Wednesday.
The session marked the 18th consecutive day that foreign investors bought a net in the local market to push the total net purchases to almost NT$110 billion during the period.
A technical rebound staged by the won stirred up more selling in the U.S. dollar in the local market after many major South Korean corporations completed cash dividend payouts to foreign shareholders, dealers said.
Before the central bank's intervention, a fall of the Chinese yuan against the U.S. dollar let some air out of the Taiwan dollar after China reported lower-than-expected economic growth for the first quarter of this year, they said.
The local central bank jumped into the trading floor in the late trading session after the U.S. dollar fell below the NT$30.20 mark to push the greenback back by the end of the session, they said.
Despite the central bank's presence, trading volume in the local foreign exchange market remained moderate, with many traders on the sidelines ahead of a speech scheduled by U.S. Federal Reserve chair Janet Yellen at the Economic Club of New York set for later in the day, dealers said.
Traders have turned anxious, looking for more clues from Yellen's speech about the Fed's future monetary policy, they added.