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

2012/09/21 17:37:45

Taipei, Sept. 21 (CNA) The U.S. dollar fell against the Taiwan dollar Friday, shedding NT$0.058 to close at NT$29.450 as the greenback recouped part of its early losses on the back of the local central bank's intervention, dealers said.

The central bank's efforts to slow down the pace of the Taiwan dollar's appreciation showed its determination to boost the island's global competitiveness by making locally made goods cheaper, they said.

The U.S. dollar opened at the day's high of NT$29.508 and moved to an early low of NT$29.320 before rebounding. Turnover totaled US$669 million during the trading session.

Dealers said the central bank stepped in again in the late trading session in a bid to alleviate the impact on local exporters from a rising Taiwan dollar, in particular after the U.S. Federal Reserve announced a third round of quantitative easing (QE3) last week.

Before the intervention, the U.S. dollar lost momentum against the Taiwan dollar soon after the local foreign exchange market opened as traders took cues from the strength of most of the other regional currencies, such as the South Korean won and the Indonesian rupiah, they said.

The currencies in the region have got a boost from further fund inflows resulting from the spill-over effect on Asia after the U.S. central bank pumped more liquidity into the market, they added.

Under the QE3 program, the Fed will spend US$40 billion a month on buying mortgage-backed securities for as long as it deems necessary.

A rising euro also gave traders a strong hint to buy into the Taiwan dollar after the 10-year government bond yields in debt-ridden Italy and Spain fell amid optimism toward the European Central Bank's bond buying plan that was unveiled last month, dealers said.

A net purchase of NT$8.48 billion (US$288 million) worth of local shares by foreign institutional investors added downward pressure on the U.S. dollar before the central bank's intervention, they said.

Foreign banks and local exporters stood on the buy side for the Taiwan dollar, betting that the local currency will rise further against the U.S. dollar as foreign investors keep moving funds into the local market, they added.

(By Eva Feng and Frances Huang)