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

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

The U.S. dollar rose against the Taiwan dollar Wednesday, gaining NT$0.015 to close at NT$33.050 on the back of intervention by Taiwan's central bank to prop up the U.S. dollar, dealers said.

The central bank's buying offset the impact on the U.S. dollar resulting from weakness in other regional currencies, which were hit by a falling Chinese yuan and foreign institutional selling in the local equity market, the dealers said.

It was the 10th consecutive session in which the U.S. dollar had closed above the NT$33 level in the local market.

The greenback opened at NT$32.805, and moved between NT$32.799 and NT$33.150 before the close. Turnover expanded to US$1.105 billion during the trading session.

The U.S. dollar opened lower against the Taiwan dollar as traders locked in gains posted a session earlier due to the local central bank's buying, and the selling continued at a time when local exporters kept cutting their greenback holdings in exchange for the Taiwan dollar in order to meet seasonal fund demand, the dealers said.

However, the losses suffered by the U.S. currency in the local market were capped to some extent by the downturn in the other regional currencies, they said.

The regional currencies encountered downward pressure in the wake of the yuan's depreciation against the U.S. dollar, which raised fears over a further fund exodus from the region and more selling in the regional currencies, they said. The yuan fell to a five-year low at one point on the offshore market Wednesday.

Foreign institutional selling in local shares also reined in the weakness of the U.S. dollar on the local foreign exchange market, the dealers said. According to the Taiwan Stock Exchange, foreign institutional investors sold a net NT$3.45 billion (US$104 million)-worth of shares on the local main board, sending the weighted index down 0.17 percent at the close Wednesday.

After witnessing the U.S. dollar falling below the NT$32.8 mark, the central bank jumped onto the trading floor, as it has done almost every session recently, to boost the greenback. The bank's buying appeared more visible in the late trading session, the dealers said.

The central bank's intervention vaulted the U.S. dollar back to NT$33, a level the bank wants to maintain in the short term in a bid to strengthen Taiwan's global competitive edge, they said.

(By Chiu Po-sheng and Frances Huang)

Updated : 2021-03-03 14:17 GMT+08:00