US dollar finishes trade at day's high of NT$29.740
CNATAIPEI -- The U.S. dollar rose against the New Taiwan dollar yesterday, gaining NT$0.038 to close at the day's high of NT$29.740 after moving in a narrow range amid concerns over the debt situation in the eurozone, dealers said.
February 27, 2013, 12:12 am TWN
A fall in the euro against the U.S. dollar made traders wary of fluctuations in currencies in the region as they were afraid that political uncertainty following parliamentary elections in debt-ridden Italy over the weekend will further complicate the debt problems in the region, they said.
Taking advantage of cautious sentiment toward the financial situation in Europe, the central bank stepped in during the latter part of the session to place downward pressure on the New Taiwan dollar and prop up the U.S. dollar.
The greenback opened at NT$29.732 and moved to an early low of NT$29.620 before rebounding. Turnover totaled US$802 million during the trading session.
Investor sentiment turned very cautious soon after the local foreign exchange market opened as traders feared that the parliamentary elections in Italy could create a political stalemate by producing a hung parliament, which would lead to a new round of elections and further political uncertainty, the dealers said.
Many traders were afraid that political chaos in Italy, the third-largest economy in the eurozone, could prompt that country to depart from belt-tightening measures under outgoing Prime Minister Mario Monti designed to cut the nation's debt, they said.
The euro at one point overnight fell to its lowest against the U.S. dollar since Jan. 7, leading to weakness among most of the currencies in the Asia region, they said.
The South Korean won reflected the weakening euro by trending lower, further dampening sentiment among traders in the domestic foreign exchange market toward the regional currencies, the dealers said.
The falling won drove the local central bank to intervene in the New Taiwan dollar by buying into the U.S. dollar and cutting its holdings in the local currency to help the greenback recoup its early losses after moving in ranged trade. The dealers added that the central bank was reluctant to see the New Taiwan dollar lag behind in the regional currency devaluation competition.