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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 Wednesday, gaining NT$0.128 to close at the day's high of NT$33.808 in reflection of a looming foreign fund exodus, marking the fourth consecutive session in which the U.S. currency moved higher here, dealers said.

The U.S. dollar dipped to a two-week low against the Taiwan dollar.

Taiwan's central bank jumped onto the trading floor again, to place more downward pressure on the Taiwan dollar and give an additional boost to the U.S. dollar in a bid to protect Taiwan's exports, the dealers said.

The greenback opened at NT$33.548 and moved to a low of NT$33.410 before rebounding. Turnover totaled US$977 million during the trading session.

The U.S. dollar opened lower against the Taiwan dollar as Taiwanese exporters continued to raise their holdings in the local currency to meet seasonal fund demands ahead of the upcoming Lunar New Year holiday, which will start Feb. 6, the dealers said.

However, the losses suffered by the U.S. dollar were limited, as traders here took cues from moves by foreign investors to pull funds out of the region before the Feb. 5 release of the January non-farm payroll data in the United States, they said.

The U.S. job data is expected to serve as an indicator of whether the Federal Reserve will continue to raise its key interest rates in its next policymaking meeting scheduled for March. Traders here tended to cut their holdings in the regional currencies for the moment, the dealers said.

On the back of the fund outflows, the South Korean won fell to a more-than five-year low against the U.S. dollar at one point, which prompted the local central bank to push down the Taiwan dollar, in particular in the late trading session, they said.

Even before the local central bank's intervention, the U.S. dollar got some support from foreign institutional selling in the local equity market, the dealers said. According to the Taiwan Stock Exchange, foreign institutional investors sold a net NT$1.65 billion (US$48.81 million)-worth of shares on the local main board, sending the weighted index down 0.84 percent at Wednesday's close.

There are only two trading sessions left in the Taipei Forex before the Lunar New Year holiday, the dealers noted, so turnover could be light amid fears over possible volatility in global markets during the holiday.

(By Tsai Yi-chu and Frances Huang)
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