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

2012/04/27 17:29:25

Taipei, April 27 (CNA) The U.S. dollar fell against the Taiwan dollar Friday, shedding NT$0.08 to close at NT$29.332 as further fund inflows boosted demand for the local currency, dealers said.

Expectations are also mounting among traders that Taiwan's central bank will allow the Taiwan dollar to appreciate further against the U.S. dollar in a bid to counter rising inflationary pressures in the local market, they said.

The greenback opened at the day's high of NT$29.415 and moved to alow of NT$29.240 before rebounding. Turnover totaled US$912 million during the trading session.

Dealers said funds continued entering the local market as many local enterprises repatriated their earnings from overseas back to Taiwan with the tax payment season approaching.

Soon after the local foreign exchange market opened, the fund inflows pushed demand for the Taiwan dollar higher, causing it to breach the NT$29.300 mark at one point, they said.

After the local unit rose to a seven-month high a session earlier, more and more traders have speculated that the local central bank has become more willing to see the Taiwan dollar further appreciate against the U.S. dollar to fight inflation, they added.

Taiwan's government has pledged to keep inflation at 2 percent or lower in 2012, despite raising domestic fuel prices by an average 10 percent in early April and announcing an increase in electricity rates scheduled for May 15.

Traders were also betting that the U.S. Federal Reserve will adopt further liquidity easing measures to boost the economy, a move expected to encourage more fund inflows into the region and bolster regional currencies, dealers said.

In addition to the Taiwan dollar, the South Korean won was also riding the wave of similar speculation, they said.

(By Kao Chao-fen and Frances Huang)