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

2012/06/22 17:35:44

Taipei, June 22 (CNA) The U.S. dollar rose against the Taiwan dollar Friday, gaining NT$0.066 to close at NT$29.968 as traders moved their funds to the greenback as a safe haven amid concerns over the global economy, dealers said.

Market sentiment toward global economic fundamentals has been dampened by weakening manufacturing activity in China, reflected by a recent fall in the HSBC Manufacturing Purchasing Managers' Index, and worse-than-expected home sales in the United States, they said.

A falling euro overnight also led traders to cut their Taiwan dollar holdings after Moody's downgraded the credit ratings of 15 major financial institutions around the world, they added.

The U.S. unit opened at NT$30.000, and moved between NT$29.910 and NT$30.010 before the close. Turnover totaled US$768 million during the trading session.

Rising concerns over the global economy caused by the latest unfavorable economic data in China and the U.S. drove many traders to buy into the U.S. dollar and sell the Taiwan dollar soon after the local foreign exchange market opened, dealers said.

Foreign banks sold Taiwan dollar holdings, betting that the local currency would continue its downward trend because of a growing lack of confidence in the global economy's prospects, they said.

The U.S. Federal Reserve's recent cut in its forecast of U.S. economic growth for 2012, and disappointing U.S. home sales data confirmed their mounting concerns, dealers said.

At the same time, Moody's downgrade of 15 financial institutions, including Bank of America, Goldman Sachs and JPMorgan, dragged down the value of the euro overnight and added downward pressure on most Asian currencies, they said.

In the local bourse, foreign institutional investors were net sellers of NT$8.15 billion (U$$272 million) in shares, putting even more selling pressure on the Taiwan dollar in the forex market throughout the day, they added.

(By Kao Chao-fen and Frances Huang)