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

2012/04/13 17:21:40

Taipei, April 13 (CNA) The U.S. dollar fell against the Taiwan dollar Friday, shedding NT$0.022 to close at NT$29.528 as a rebound staged by the local bourse raised demand for the local currency, dealers said.

The Taiwan dollar was also boosted by the strength of most of the currencies in the region amid hopes that the U.S. Federal Reserve will continue to keep interest rates low, a move expected to further lift non-U.S. dollar currencies on spill-over effects from ample liquidity in the U.S. market, the dealers said.

The greenback opened at the day's high of NT$29.550 and moved to a low of NT$29.450 before rebounding. Turnover totaled US$642 million during the trading session.

The U.S. unit extended its losses against the Taiwan dollar from a session earlier right after the local foreign exchange market opened as traders took their cues from a rebound staged by the domestic bourse, the dealers said.

Local share prices steamed ahead on foreign institutional buying as market uncertainty was relaxed a day after the Ministry of Finance officially proposed a capital gains tax on stock investments, they said.

The weighted index closed up 1.63 percent at the day's high of 7,788.27 points after foreign institutional investors served as net buyers of NT$2.91 billion (US$98.55 million)-worth of shares.

The strength of most currencies in the region, in particular the South Korean won and the Singapore dollar, further stirred up buying interest in the Taiwan dollar and lifted the local currency against the U.S. dollar during the session, the dealers said.

Many traders were betting that the Taiwan dollar would go higher against the greenback as the U.S. central bank has hinted it will keep liquidity high to boost the U.S. economy.

Such hopes for low interest rates in the U.S. market were raised after U.S. Fed Vice Chairman Janet Yellen and New York Fed President William Dudley said U.S. borrowing costs will remain low, they added.

However, despite the gains posted by the Taiwan dollar, turnover remained moderate amid cautious sentiment toward the regional economy after China reported economic growth of 8.1 percent for the first quarter of this year, the smallest growth in nearly three years, thedealers said.

(By Kao Chao-fen and Frances Huang)