US dollar declines to NT$29.965 on Taipei foreign exchange
August 29, 2014, 12:00 am TWN
TAIPEI--The U.S. dollar fell against the Taiwan dollar Thursday, shedding NT$0.020 to close at NT$29.965 as foreign funds kept flowing into the country, boosting demand for the local currency, dealers said.
Amid high liquidity, foreign institutional investors remained on the buy side of the local market, which added downward pressure on the U.S. dollar throughout the session, dealers said.
The strength of other regional currencies also placed selling pressure on the U.S. dollar in the local foreign exchange market before the central bank stepped in to slow down the pace of the Taiwan dollar's appreciation, dealers said.
It was the second consecutive session that the U.S. dollar closed below the NT$30 mark.
The greenback opened at the day's high of NT$29.985, and moved to a low of NT$29.883 before rebounding. Turnover totaled US$718 million during the trading session.
After opening flat, the U.S. dollar was soon trading below its previous closing level as traders here were encouraged by further fund inflows into the local market amid optimism about the earnings prospects of local listed companies, dealers said.
Foreign institutional investors picked up more local shares, buying NT$4.07 billion (US$136 million) net worth, which prompted traders to sell the U.S. dollar in exchange for the Taiwan dollar, dealers said.
A stronger South Korean won, which rose 0.1 percent against the U.S. dollar on the back of South Korea's growing trade surplus, gave a strong indication to traders here to raise their Taiwan dollar holdings, dealers said.
In addition, the People's Bank of China raised the reference rate of the yuan against the U.S. dollar, which heightened traders' interest in buying the yuan and other regional currencies, including the Taiwan dollar, dealers said.
Late in the session, the local central bank jumped onto the trading floor, helping the U.S. dollar recoup part of its earlier losses, but the greenback nonetheless ended below the NT$30 mark, dealers said.
Market sentiment toward the U.S. dollar remained cautious ahead of the U.S.' release of its revised data for second-quarter economic growth and its private consumption report, dealers said.
These economic reports will offer more clues about the Federal Reserve's plans for its monetary policy, according to dealers.