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September 20, 2017

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US dollar closes higher on local forex but gains capped by equities buy up

TAIPEI -- The U.S. dollar rose against the New Taiwan dollar Wednesday, gaining NT$0.072 to close at NT$31.890 as traders here took cues from weakness in other regional currencies to dispose of the local unit, dealers said.

The gains posted by the U.S. dollar were capped by foreign institutional buying in local equities, the dealers said. Still, the U.S. dollar closed higher against the New Taiwan dollar for the second consecutive session.

The greenback opened at NT$31.820 and moved between NT$31.788 and NT$31.909 before the close. Turnover totaled US$959 million during the trading session.

Soon after the local foreign exchange opened, the U.S. dollar got a boost on follow-through buying from a day earlier on hopes that the U.S. Federal Reserve will raise its key interest rates next week, the dealers said.

The hopes of a rate hike by the Fed were increased by strong economic growth in the United States, where the gross domestic product (GDP) for the third quarter rose 3.2 percent, an upgrade from the previous reading of 2.9 percent, they said.

The solid GDP growth pushed up the yield of U.S. treasury bonds, which encouraged traders in the region to buy into the U.S. dollar by dumping regional units, including the New Taiwan dollar, they added.

The greenback, however, met a barrier, failing to move even higher, as foreign institutional investors shifted to the buy side in the local equity market, the dealers said.

According to the Taiwan Stock Exchange, foreign institutional investors bought a net NT$1.03 billion (US$32.30 million)-worth of shares on the main board Wednesday after a net sale of NT$40.52 million a day earlier.

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