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

2012/05/22 18:10:38

Taipei, May 22 (CNA) The U.S. dollar fell against the Taiwan dollar Tuesday, shedding NT$0.032 to close at NT$29.546 as the local currency gained strength amid rising optimism toward the European debt situation, dealers said.

The strength of other currencies in the region against the U.S. dollar also propelled traders to dump the greenback and raise their Taiwan dollar holdings, they said.

The U.S. unit opened at the day's high of NT$29.580 and moved to a low of NT$29.460 before rebounding. Turnover totaled US$623 million during the trading session.

General market sentiment toward Europe's debt problems improved to some extent after the leaders of the G8 nations voiced their support to keep debt-ridden Greece in the eurozone at their summit held over the weekend, dealers said.

Optimism has also grown that European leaders will come up with concrete measures to cope with the eurozone's financial difficulties at an EU summit scheduled for Wednesday, they said.

The upbeat mood boosted both the stock and foreign exchange markets in the region, encouraging traders to buy into regional currencies, including the Taiwan dollar and the South Korean won, they added.

The local stock market extended its momentum from a session earlier after Wall Street rallied overnight and several major European markets showed gains, dealers said.

The weighted index closed up 1.14 percent at the day's high of 7,274.89, although foreign institutional investors sold a net of NT$2.92 billion (US$98.8 million) worth of local shares.

In a bid to slow down the Taiwan dollar's appreciation against the greenback and preserve the island's global competitiveness, the local central bank stepped into the local forex market, particularly after the local currency breached the NT$29.50 level during the trading session, dealers said.

Despite the gains posted by the Taiwan dollar, turnover remained moderate as many traders remained cautious over the political climate in Greece ahead of new parliamentary elections there scheduled for June 17, they said.

(By Kao Chao-fen and Frances Huang)