Greenback falls on Taipei forex as regional strength grows
May 16, 2014, 12:05 am TWN
TAIPEI--The U.S. dollar fell against the Taiwan dollar Thursday, shedding NT$0.017 to close at NT$30.203 as traders were encouraged by the strength of other regional currencies to cut their greenback holdings, dealers said.
Foreign institutional buying in the local bourse added downward pressure on the U.S. dollar throughout the session, the dealers said.
Market sentiment remained cautious ahead of U.S. consumer price index for April due later in the day as traders were waiting for more clues about what the Federal Reserve will do regarding its monetary policy, they added.
The greenback opened at NT$30.220 and moved between NT$30.140 and NT$30.229 before the close. Turnover totaled US$704 million during the trading session.
The U.S. dollar opened unchanged but soon fell into the red as investors took cues from gains posted by the South Korean won to pick up the Taiwan dollar by dumping the greenback in the local foreign exchange market, the dealers said.
The won got a boost from foreign fund inflows to rise 0.25 percent against the greenback at one point, emerging from losses suffered by the currency a session earlier, they said.
A rising Chinese yuan also served as an indication to traders to buy into the Taiwan dollar after the People's Bank of China raised the yuan's reference rate against the U.S. currency, the dealers said.
In addition, foreign institutional investors remained on the buy side, serving as net buyers of NT$1.89 billion (US$62.58 million)- worth of local shares, which boosted demand for the Taiwan dollar, they said.
In the late session, the local central bank jumped onto the trading floor again to prop up the U.S. dollar and help the currency return to the NT$30.20 level, which the market believes is the central bank's bottom line in the short term, the dealers said.
Turnover remained moderate as many investors stayed on the sidelines to wait for Washington's April consumer price index data, after the U.S. producer price index for that month rose at a higher-than-expected pace, they said.
Fears escalated that if U.S. inflationary pressure picks up, the Fed could speed up the pace of ending its monthly bond-buying program, they added.