Taipei, May 15 (CNA) The U.S. dollar rose against the Taiwan dollar Tuesday, gaining NT$0.012 to close at NT$29.514 on a further fund flight out of the country amid rising concerns over the debt crisis in Europe, dealers said.
A drop in the euro to a four-month low against the U.S. dollar overnight prompted many traders to cut their holdings in regional currencies, including the Taiwan dollar, they said.
The greenback opened at NT$29.550 and moved between NT$29.390 and NT$29.579 before the close. Turnover totaled US$962 million during the trading session.
The dealers said concerns over the market outlook turned many foreign institutional investors away from the local bourse, a move that put the Taiwan dollar under pressure.
Foreign institutional investors sold a net worth of NT$6.32 billion (US$214 million) shares during the day after a net sell-off of NT$2.21 billion-worth of shares recorded in the previous session.
The large sell-off by foreign institutional investors boosted the trading volume on the local foreign exchange market, the dealers said.
They said the global financial markets remained haunted by fears about the debt problems in the eurozone, in particular after debt-ridden Greece failed to form a coalition government after May 6 parliamentary elections, that was supposed to deal with the crisis.
Moody's Investors Service downgraded credit ratings on 26 banks in Italy, prompting many traders to become more gloomy about the financial environment in the European market, they said.
In addition, a spike in the 10-year bonds in Spain to above 6 percent boosted risks that the country will seek a bailout, they added.
These negative leads, the dealers said, dragged down the euro and currencies in the Asian region, with many investors moving their fundsto the U.S. dollar as a safe haven.
In addition to the political standoff in Greece, many traders were keeping a close eye on an upcoming meeting between German Chancellor Angela Merkel and France's new leader, Francois Hollande.
(By Kao Chao-fen and Frances Huang)