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

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

Taipei, Aug. 11 (CNA) The U.S. dollar rose against the Taiwan dollar Tuesday, gaining NT$0.320 to close at NT$32.080 as traders here were encouraged by a sharp decline of the Chinese yuan to dump the local currency, dealers said. Taiwan's central bank was believed to stand on the buy side for the U.S. dollar to further push up the currency in the late trading session and placed more pressure on the Taiwan dollar in a bid to make Taiwan's exporters cheaper in the global market, they said. The greenback opened at NT$31.760, and moved between NT$31.555 and NT$32.100 before the close. Turnover totaled US$1.931 billion during the trading session. The U.S. dollar opened flat against the Taiwan dollar and soon fell into negative territory as the local currency staged a rebound. But in the mid-morning session, the U.S. dollar turned stronger after the People's Bank of China (PBOC) cut the reference rate of the Chinese yuan against the greenback. To boost China's exports, the PBOC set the yuan reference rate by 1.86 percent lower than Monday, a move which sent the yuan into a tailspin to an almost three-year low at one point. Regional central bankers have stepped into a currency depreciation competition at a time when global demand has showed signs of weakening, dealers said, adding that Tuesday's cut in the yuan reference rate by the PBOC even exacerbated the regional currency war. In the wake of the falling yuan, other regional currencies faced heavy downward pressure throughout the Tuesday trading session, in particular the South Korean won, dealers said. As the won has been watched closely by currency traders here before they mapped out strategies on how to trade the Taiwan dollar, the losses of the South Korean currency added more selling of the Taiwan dollar, they said. The regional currency competition is expected to escalate in the future as the U.S. Federal Reserve is expected to kick off an interest rate hike cycle later in the year. A stronger U.S. dollar is expected to prompt foreign investors to move their funds out of the region to devaluate the regional currencies even more. Several business groups have urged the local central bank to allow the Taiwan dollar to fall further against the U.S. dollar. Among them, Taiwan Machine Tool & Accessory Builders' Association (?????????) Tuesday even urged the central bank to devalue the Taiwan dollar to the NT$36 mark to boost Taiwan's exports. In the first seven months of this year, Taiwan's exports fell 7.8 percent from a year earlier to US$165.98 billion. (By Frances Huang)


Updated : 2021-09-19 06:11 GMT+08:00