US dollar rises against NT dollar despite strong yuan
May 9, 2014, 12:01 am TWN
TAIPEI -- The U.S. dollar rose against the Taiwan dollar Thursday, gaining NT$0.002 to close at NT$30.167 as the greenback recouped earlier losses to return to positive territory on the back of buying by the local central bank, dealers said.
The greenback opened at NT$30.170 and moved between NT$30.080 and NT$30.179 before the close. Turnover totaled US$568 million during the trading session.
The U.S. dollar opened higher against the Taiwan dollar on a technical rebound from the losses seen in the previous session, but immediately fell into the red as traders took hints from the strength of the Chinese yuan to buy into the local currency by cutting their U.S. unit holdings, the dealers said.
The rising yuan reflected a surprise year-on-year increase in China's exports in April. The trade data reduced concerns over the pace of the growth of the world's second-largest economy and boosted market confidence in the regional economy, they said.
Last month, China's exports rose 0.9 percent from a year earlier, beating the market's previous estimate of a year-on-year 3-percent drop.
A rebound staged by the local market added downward pressure on the U.S. dollar before the central bank's intervention as foreign institutional investors shifted to the buy side to pick up local shares, in particular financial stocks, which boosted demand for the Taiwan dollar, the dealers said.
Foreign institutional investors served as net buyers of about NT$1.8 billion-worth of local shares on the Taiwan Stock Exchange, where the weighted index closed up 0.42 percent at 8,930.90 points.
Many enterprises operating here rushed to add the Taiwan dollar to their portfolios, betting that the U.S. Federal Reserve will continue to keep liquidity high, after Fed Chairwoman Janet Yellen said in a congressional testimony overnight that a “high degree of monetary policy accommodation remains warranted.”
The local central bank jumped onto the trading floor in the late session as it has done many times recently.
The continued intervention by the central bank is aimed at maintaining the value of the U.S. dollar above the NT$30.10 mark in the short term to boost Taiwan's global competitiveness, the dealers said.