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U.S. dollar closes higher on Taipei forex (update)

U.S. dollar closes higher on Taipei forex (update)

Taipei, Oct. 11 (CNA) The U.S. dollar rose against the Taiwan dollar Thursday, gaining NT$0.033 to close at NT$29.432 after further efforts by the local central bank to buy the greenback helped the currency reverse its earlier losses, dealers said. As many local business leaders have strongly urged the central bank to intervene in the foreign exchange market, the bank jumped into the trading floor again to slow down the pace of the Taiwan dollar's appreciation against the U.S. dollar, they said. The U.S. unit opened at the day's high of NT$29.490, and moved to an early low of NT$29.250 before rebounding. Turnover totaled US$681 million during the trading session. The central bank's intervention appeared more apparent after the U.S. dollar fell below the NT$29.30 mark in an attempt to ease the anxiety of Taiwanese exporters who had been hurt by falling global demand and viewed a rising Taiwan dollar as a threat to their sales, dealers said. Before the central bank's presence, the U.S. currency continued a downward trend soon after the local exchange market opened on the back of inflows of foreign funds as the global market has been awash in high liquidity, they said. In addition, a positive showing by the Chinese yuan gave traders a strong hint to buy other currencies in the region, including the Taiwan dollar and the South Korean won, dealers said. The strength of the Chinese yuan, which at one point hit its biggest high since 1993, reflected market speculation that the China government will announce further stimulus measures, in particular in public transportation projects, to lift the economy, they said. Despite the earlier gains posted by the Taiwan dollar, turnover remained moderate as many traders stayed on the sidelines amid lingering concerns over the debt problems in the eurozone, dealers said. Concerns over the European financial situation ran deeper, in particular after Standard & Poor's lowered Spain's credit rating from BBB+, to BBB-, just one notch above the junk status, dealers said. The S&P's downgrade prompted many traders to think Moody's will follow suit soon, which has further dampened market sentiment toward the financial situation of the European country, they said. (By Lin Hui-chun and Frances Huang)