US dollar closes higher on Taipei forex

21-Dec-2016 Intellasia | CNA | 6:00 AM Print This Post

The US dollar rose against the Taiwan dollar Monday, gaining NT$0.003 to close at NT$31.970 as the greenback extended its momentum from a week earlier after the US Federal Reserve cut its key interest rates, dealers said.

Foreign institutional selling in the local equity market added downward pressure on the Taiwan dollar, but the local currency got some support from buying by Taiwanese exporters who needed the local currency to meet seasonal fund demand, the dealers said. The greenback opened at NT$31.950 and moved between NT$31.937 and NT$31.983 before the close. Turnover totalled $712 million during the trading session.

Soon after the local foreign exchange market opened, the US dollar trended lower on a mild correction from a spike seen a session earlier, but soon regained footing as traders here were motivated by the weakness of other currencies in the region to dispose of the Taiwan dollar, the dealers said.

Selling in the currencies in the region reflected hopes that the US dollar will move even higher after the Fed raised interest rates last week, they said, adding that more importantly, a projection by the Fed that it will hike interest rates three times in 2017 encouraged traders to buy more of the greenback.

The South Korean won, which the Taiwan dollar tracks closely since Taipei and Seoul compete with each other fiercely in the global market, fell to a low since June at one point, which prompted traders here to cut their holdings in the Taiwan dollar, the dealers said.

The losses incurred on the local equity market on the back of foreign institutional selling gave another boost to the US dollar, the dealers said. According to the Taiwan Stock Exchange, foreign institutional investors sold a net NT$1.996 billion (US$62.43 million)-worth of shares on the main board, sending the weighted index down 0.94 percent at the close Monday.

With the fourth quarter coming to an end, the dealers said, more and more Taiwanese exporters are selling their US dollars in exchange for Taiwan dollars to meet end of the year fund demand.

As a result, they added, losses posted by the Taiwan dollar were capped by the end of the session.


Category: Taiwan

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