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

2012/05/04 18:50:16

Taipei, May 4 (CNA) The U.S. dollar rose against the Taiwan dollar Friday, gaining NT$0.014 to close at NT$29.280 after the local central bank intervened by buying into the greenback, dealers said.

Despite its early gains, the U.S. dollar moved in a narrow range throughout the session as concerns over the pace of a global economic recovery remained after Washington released disappointing service activity data overnight, they said.

The U.S. dollar opened at NT$29.280, and moved between NT$29.229 and NT$29.300 before the close. Turnover totaled US$554 million during the trading session.

Dealers said that soon after the local foreign exchange market opened, the greenback suffered losses as foreign banks remained on the sell side.

The U.S. unit remained weak against the Taiwan dollar during most of the trading session before the central bank intervened, which appeared obvious as the U.S. currency moved closer to the NT$29.20 level, they said.

Although the central bank has recently allowed the Taiwan dollar to appreciate slightly to offset inflationary pressures, dealers said its short-term bottom line was set at NT$29.20.

The gains posted by the Taiwan dollar were also capped by rising worries over the world's economic fundamentals after the Institute of Supply Management (ISM) reported a decline in activity in the U.S. services sector.

The ISM's index of economic activity in the sector fell below market expectations to 53.5 in April from 56 in March. The April figure was a four-month low.

Dealers said the weakness of other currencies in the region, in particular the South Korean won, also took some steam out of the Taiwan dollar's advance even ahead of the central bank's intervention.

Turnover during the session remained thin, indicating that many traders preferred to stay on the sidelines to wait for the release later in the day of U.S. employment data for April to get a clearer picture of the global economy, dealers said.

(By Kao Chao-fen and Frances Huang)