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

2012/08/01 17:16:39

Taipei, Aug. 1 (CNA) The U.S. dollar fell against the Taiwan dollar Wednesday, shedding NT$0.022 to close at NT$29.988 as the local currency followed the South Korean won to extend strength on lingering hopes that the world's major central banks will pump more funds into the market to lift the economy, dealers said.

However, a fall in manufacturing activity in China for July deflated the regional currencies somewhat amid rising concerns over the global economic slowdown, dealers said.

The greenback opened at NT$30.010, and moved between NT$29.870 and NT$30.049 before the close. Turnover totaled US$758 million during the trading session.

In line with its regional counterparts, in particular the South Korean won, the Taiwan dollar continued steaming ahead, moving higher against the U.S. dollar soon after the local foreign exchange market opened, dealers said.

Foreign banks served as the major buyers of the Taiwan dollar, betting the U.S. Federal Reserve will keep buying long term bonds to maintain high liquidity in the market, they said.

The U.S. Fed was expected conclude a two-day Federal Open Market Committee meeting later in the day, while the European Central Bank is scheduled to hold a policymaking meeting in Frankfurt on Thursday.

The market has been anticipating that the ECB will announce greater spending to buy bonds from debt-ridden countries or even cut its key interest rates, dealers said.

The gains posted by the regional currencies against the greenback were offset to some extent by a drop in China's manufacturing activity data for July which has sparked worry about the mainland's economy, dealers said.

China's Purchasing Managers' Index for July, an indicator of manufacturing activity, fell to 50.1 for July from 50.2 in June, and failed to meet a market estimate of 50.5.

However, some traders remained optimistic that the Chinese authorities would come up with stimulus measures soon to quell market anxiety, dealers said.

(By Kao Chao-fen and Frances Huang)
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