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Taiwan: Taiwan dollar sharply higher on further U.S. monetary easing policy

Taiwan: Taiwan dollar sharply higher on further U.S. monetary easing policy

The Taiwan dollar was sharply higher against the U.S. dollar this morning trading after the U.S. Federal Reserve Board announced a plan to buy debt in the open market to stimulate the economy, dealers said.

At 11:25 a.m., the Taiwan dollar was trading at the day's high of NT$30.2740 against the greenback, compared with yesterday's closing level of NT$30.650.

The U.S. Fed announced overnight it would pump US$600 billion into the economy through the purchase of long-term Treasury bonds by the end of June 2011.

The announcement sent most Asian currencies, including the Taiwan dollar, higher against the greenback in the regional market, dealers said.

They said the scale of the Fed's quantitative easing gambit was larger than had been anticipated by the market and would unquestionably dilute the value of the U.S. dollar and pave the way for further appreciation of Taiwan's currency.

Positive momentum in Taiwan's stock market has attracted more foreign funds, adding additional downward pressure on the U.S. dollar, and foreign banks have seized the opportunity to further cut their U.S. dollar positions, dealers added.

In this morning trading, the local stock market's benchmark weighted index rose 0.73 percent to 8,354.29.

Dealers predicted, however, that after the local currency's morning gains, investors would turn cautious, waiting to see the extent to which Taiwan's central bank intervenes in the foreign exchange market in late trading to dampen the Taiwan dollar's appreciation.

They said the central bank's recent intervention had maintained the U.S. dollar above the NT$30.50 level, leading investors to suspect that the NT$30.50 rate may be the central bank's short-term bottom line to avoid hurting the competitiveness of local exporters.

Updated : 2021-05-14 07:10 GMT+08:00