Greenback sheds NT$0.078 to close at NT$30.050
May 31, 2014, 12:00 am TWN
TAIPEI -- The U.S. dollar fell against the New Taiwan dollar Friday, falling NT$0.078 to close at NT$30.050, as foreign investors continued to move funds into Taiwan, boosting the value of the local currency, dealers said.
Seasonal fund demand from local exporters to make month-end payments on the last business day of May and the slow pace of the Chinese yuan's depreciation also placed downward pressure on the U.S. dollar throughout the session, they said.
Only with intervention by Taiwan's central bank late in the session was the greenback able to recoup most of its earlier losses at the close, dealers said.
The greenback opened at NT$30.128, and moved between NT$29.965 and NT$30.139 before the close. Turnover totaled US$678 million during the trading session.
The U.S. dollar opened flat but soon fell into negative territory as traders here saw foreign investors move more funds into Taiwan and local exporters rush to raise their Taiwan dollar holdings to meet month-end fund demand, dealers said.
The U.S. dollar had trended lower in recent sessions and even fell below the NT$30 mark at one point Friday amid rising optimism over Taiwan's economy on improving macroeconomic data.
GDP Forcast Raised to 2.98%
The government recently raised its forecast for Taiwan's economic growth in 2014 to 2.98 percent from an earlier estimate of 2.82 percent and reported that export orders grew 8.9 percent in April from a year earlier, the third consecutive month of export order growth.
On May 27, the National Development Council announced that the government's composite economic indicator flashed a "green" light in April, signaling a stable economy growing at a steady pace.
With confidence in Taiwan's economy rising, traders were no longer looking for a safe haven in which to park their funds and consequently reduced their holdings of U.S. dollars, dealers said.
The yuan's pace of depreciation against the U.S. dollar slowed Friday after the People's Bank of China raised the reference rate for the yuan in exchange for the greenback, which also prompted selling of the greenback, they said.
Taiwan's central bank stepped into the market late in the session, as has been the case for weeks, and aggressively bought into the U.S. dollar, in particular after the greenback fell below NT$30, dealers said.
With foreign fund inflows expected to continue, the central bank is very likely to further intervene to make the Taiwan dollar cheaper, they said, adding it seems that the bank is determined to keep the U.S. dollar above the NT$30 level.