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Greenback gains NT$0.008 to end trading at NT$30.258

TAIPEI--The U.S. dollar rose against the New Taiwan dollar Wednesday, gaining NT$0.008 to close at NT$30.258 after the local central bank propped up the U.S. currency to help the unit recoup its earlier losses, dealers said.

Despite the central bank's intervention, however, turnover remained moderate as many traders stayed on the sidelines watching closely what the U.S. Federal Reserve will do in a two-day policymaking meeting set to end later in the day, they said.

The greenback opened at NT$30.250 and moved between NT$30.179 and NT$30.260 before the close. Turnover totaled US$740 million during the trading session.

After opening flat, the U.S. dollar immediately fell into negative territory as local enterprises continued to pick up the New Taiwan dollar by cutting greenback holdings to meet regular month-end fund demands as April drew to an end, dealers said.

Better Economic Growth

Better-than-expected local economic growth for the first quarter also encouraged traders to buy into the New Taiwan dollar, placing further downward pressure on the U.S. dollar.

According to the Directorate General of Budget, Accounting and Statistics, Taiwan's gross domestic product for the January-March period rose 3.04 percent from a year earlier, beating an earlier estimate of a 3.02 percent rise.

Even before the central bank stepped onto the trading floor to push up the U.S. dollar, the gains posted by the New Taiwan dollar were compromised to some extent by the weakness of the Chinese yuan after the People's Bank of China lowered the yuan reference rate again, dealers said. The yuan fell to an 18 month low at one point.

A falling local bourse also let some air out of the New Taiwan dollar throughout the session after foreign institutional investors sold a net NT$3.01 billion (US$99.48 million) worth of local shares, they said.

Market Turns Cautious

Dealers said market sentiment has turned cautious before the Fed wraps up its two-day policymaking meeting later in the day, as traders await clues on what the U.S. central bank will do with its monetary policy.

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