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

Taipei, Nov. 29 (CNA) The U.S. dollar fell against the Taiwan dollar Thursday, shedding NT$0.028 to close at NT$29.147 amid increasing optimism toward a possible solution to a pending "fiscal cliff" in Washington, dealers said. Such optimism prompted traders to cut their holdings in the greenback in exchange for regional currencies, including the Taiwan dollar, placing downward pressure on the U.S. unit in the local foreign exchange market throughout the session, they said. The U.S. dollar opened at NT$29.175, and moved between NT$29.100 and NT$29.197 before the close. Turnover totaled US$786 million during the trading session. The U.S. unit encountered selling soon after the local foreign exchange market opened as traders took cues from the positive remarks made by the White House and Congress overnight to resolve a looming fiscal cliff, dealers said. U.S. President Barak Obama and House Speaker John Boehner expressed optimism toward the talks between the White House and Congress to hammer out a solution to the pending fiscal difficulties. The fiscal cliff refers to sizeable tax increases and spending cuts that will kick in Jan. 1 if alternative deficit-cutting measures are not adopted, which could trigger a recession. Dealers said concerns over the global economy have been reduced to some extent by the favorable development in Washington's fiscal climate, encouraging many traders in the region to move their funds out of the U.S. dollar to the regional currencies. A rally on Wall Street overnight in reflection of an upbeat mood about a possible resolution to the fiscal cliff led many foreign investors to pick up stocks in the local bourse to push up demand for the Taiwan dollar, they said. Foreign institutional investors served as net buyers of NT$10.61 billion (US$364 million) worth of local shares, while the benchmark weighted index closed up 0.92 percent, at 7,503.55 points. Meanwhile, with the month coming to an end, local exporters rushed to buy the Taiwan dollar to meet increasing fund demand, which also increased selling in the U.S. dollar, dealers said. (By Eva Feng and Frances Huang)