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

2012/04/26 17:54:19

Taipei, April 26 (CNA) The U.S. dollar fell against the Taiwan dollar Thursday, shedding NT$0.102 to close at NT$29.412 as the local currency extended gains in line with its counterparts in the region, dealers said.

The strength of the regional currencies reflected escalating expectations that the U.S. Federal Reserve will come up with further liquidity easing measures to boost the economy, a move expected to lead to a spill-over effect amid ample liquidity to the region, they said.

The greenback opened at the day's high of NT$29.515 and moved to a low of NT$29.353 before rebounding. Turnover totaled US$953 million during the trading session.

The U.S. dollar turned weaker against the Taiwan dollar soon after it hit the day's high in early morning trading as traders took cues from the rising currencies in the region, in particular the South Korean won and Australian dollar, dealers said.

The buying in the Taiwan dollar increased as traders were betting that the local currency would get a further boost due to foreign fund inflows as the U.S. central bank is likely to pump more money into the market, they said.

Hopes about the Fed's additional monetary easing measures were raised after Fed Chairman Ben Bernanke said overnight the central bank remained prepared to "do more" to bolster the economy.

In addition, Fed members have agreed that the economy will remain weak enough and the central bank would keep the current ultra-low interest rates through late 2014 at least.

The latest Fed comments have prompted traders in the region to believe the U.S. central bank will adopt more bond buying measures to loosen liquidity and make it more possible for investors to move their funds to the region, dealers said.

They said the Taiwan dollar also moved higher on expectations that the local central bank would allow the local currency to appreciate in a bid to take on rising domestic inflationary pressure.

However, as the local bourse reversed its early gains by the end of the trading session on profit taking, the Taiwan dollar's upside was compromised to some extent, they added.

The weighted index closed down 0.55 percent at 7,521.35 points amid lingering concerns over a possible capital gains tax on stock investments.

(By Kao Chao-fen and Frances Huang)