US dollar ends higher at NT$30.056 after recovering on the Taipei forex
The China Post news staff with the CNA
August 7, 2014, 12:00 am TWN
The U.S. dollar rose against the New Taiwan dollar Wednesday, gaining NT$0.011 to close at NT$30.056 after the local central bank bought into the greenback, helping the currency recover earlier losses by closing, dealers said.
The central bank (中央銀行) and Financial Supervisory Commission (FSC, 金管會) yesterday collectively said that they see not a single sign that foreign capital is fleeing Taiwan, despite vehement share market swing. Under the supervision of the above-mentioned financial regulators, the sell-off of U.S. dollars by Taiwanese exporters mitigated yesterday.
The central bank's intervention offset the impact on the U.S. dollar after foreign institutional investors shifted to the buy side in the local market, which boosted demand for the New Taiwan dollar, the dealers said.
The greenback opened at the day's high of NT$30.060 and moved to a low of NT$29.990 before rebounding. Turnover totaled US$793 million during the trading session.
The U.S. dollar opened slightly higher on follow-through buying from a session earlier, but soon fell into negative territory as traders took cues from buying by foreign institutional investors in the local equity market to cut their greenback holdings, the dealers said.
After the heavy selling seen a day earlier, foreign institutional investors hunted bargains in the local market, snapping up select high-tech and financial heavyweights such as Taiwan Semiconductor Manufacturing Co. (TSMC,台灣積體電路) and Cathay Financial Holding Co. (國泰金控), a move that led to higher demand for the New Taiwan dollar, they said.
At the end of the trading session, foreign institutional investors had served as net buyers of NT$5.23 billion (US$174 million)- worth of local shares after they sold a net of NT$17.57 billion a day earlier.
The strength of the Japanese yen and Chinese yuan against the U.S. dollar in the region also placed downward pressure on the greenback in the local foreign exchange market before the local central bank stepped in, the dealers said.
After witnessing the U.S. dollar falling below the NT$30 mark, the local central bank intervention became more visible as the bank was motivated by a lower South Korean won, which fell 0.53 percent against the greenback at one point, they said.
In the short term, the U.S. dollar is expected to end above NT$30 on the back of the local central bank's buying, which is aimed at maintaining Taiwan's global competitiveness, they added.