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

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

Taipei, Sept. 12 (CNA) The U.S. dollar rose against the Taiwan dollar Monday, gaining NT$0.164 to close at NT$31.716, in reflection of fund outflows amid escalating fears over an interest rate hike by the U.S. Federal Reserve, dealers said.

Aggressive foreign institutional selling in local equities gave an additional boost to the U.S. dollar throughout the session, marking Monday the fourth consecutive session for the U.S. currency to move higher against the Taiwan dollar, the dealers said.

The greenback opened at NT$31.680 and moved between NT$31.608 and NT$31.745 before the close. Turnover totaled US$970 million during the trading session.

Right after the local foreign exchange market opened, the U.S. dollar simply rode the rising wave from a session earlier to push down the Taiwan dollar, as many currency traders became wary of a possible rate hike by the Fed, the dealers said.

The rate increase hopes had been raised since Boston Fed President Eric Rosengren, who used to be dovish toward a rate hike, said in a speech last week that gradually tightening monetary policy is an appropriate measure to maintain full employment. Rosengren is one of the voting members in the Fed.

The significant gains posted by the U.S. dollar showed that foreign investors were scrambling to move their funds out of the country, betting on a higher greenback on the back of the Fed's liquidity tightening, the dealers said.

A fund exodus was also found in other regional markets Monday, pushing down the South Korean won -- which the Taiwan dollar closely tracks -- by about 1.40 percent against the U.S. dollar at one point, which gave a clear indication to traders here to cut their holdings in the local currency, they said.

Foreign institutional selling in local equities also took a toll on the Taiwan dollar value, the dealers said. According to the Taiwan Stock Exchange, foreign institutional investors sold a net NT$15.05 billion (US$475 million)-worth of shares on the main board, sending the weighted index down 1.18 percent.

Many currency traders were holding their breath for the moment ahead of a speech planned by Fed Governor Lael Brainard later in the day, the dealers said. (By Chiu Po-sheng and Frances Huang)

Updated : 2021-04-16 23:43 GMT+08:00