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U.S. dollar closes higher on Taipei forex

U.S. dollar closes higher on Taipei forex

The U.S. dollar rose against the Taiwan dollar Thursday, gaining NT$0.032 to close at the day's high of NT$32.935 in reflection of the weakness of other currencies in the region amid fears over a rate hike by the U.S. Federal Reserve, dealers said.

Taiwan's central bank stepped in, as it has done almost every session recently, to lift the U.S. dollar to the highest level in the day in a bid to help Taiwanese exporters at a time when Taiwan is suffering a fall in exports amid weakening global demand, they said.

Sentiment remained cautious before the European Central Bank (ECB) wraps up policymaking meeting later in the day, they added. It was the sixth consecutive session for the U.S. dollar to trend higher against the Taiwan dollar.

The greenback opened at NT$32.751 and moved to a low of NT$32.742 before rebounding. Turnover totaled US$963 million during the trading session. Fears that the Fed will kick off an interest rate hike in December have been raised after Janet Yellen, head of the U.S. central bank, spoke at the Economic Club of Washington overnight, implying a rate increase.

Yellen said she has faith in the U.S. economic outlook and "looking forward" to an interest rate increase, adding that holding rates at zero for too long could pose a risk to financial stability. The Fed is scheduled to hold a policymaking meeting Dec. 15-16.

In the wake of Yellen's comments, currencies in the region came under pressure as foreign investors rushed to move funds out of the region to buy U.S. dollar assets on expectations of a stronger greenback after a rate increase, dealers said.

Foreign banks operating in Taiwan stood on the sell side for the U.S. dollar by taking into account Yellen's remarks, they said.

The local central bank simply seized he losses suffered by other regional currencies, in particular the South Korean won, as a cause to boost the U.S. dollar, dealers said. The won, which has been closely followed by traders here, dipped to an almost two-week low against the U.S. dollar at one point.

However, the losses posted by the Taiwan dollar were capped by hopes that the ECB will announce to further ease its monetary policy after the policymaking meeting, a move which is expected to create spill-over effects to the region and lend support to the regional currencies, dealers said. (By Chiu Po-sheng and Frances Huang)


Updated : 2021-09-20 04:17 GMT+08:00