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

2012/09/20 18:04:39

Taipei, Sept. 20 (CNA) The U.S. dollar rose against the Taiwan dollar Thursday, gaining NT$0.103 to close at NT$29.508 after the local central bank intervened to help the greenback reverse its early losses, dealers said.

The buying by the central bank indicated its determination to protect Taiwan's global competitiveness in order to boost exports, they said.

The U.S. dollar opened at NT$29.430, and moved between NT$29.260 and NT$29.510 before the close. Turnover totaled NT$727 million during the trading session.

With Taiwan reporting in August the sixth consecutive year-on-year decline in monthly exports, the central bank has been gearing up for market intervention to slow down the pace of the Taiwan dollar's appreciation against the U.S. unit in recent sessions, dealers said.

The bank's efforts became more obvious since the U.S. Federal Reserve announced a third round of quantitative easing (QE3), which has created a spillover effect on Asia and lifted the value of the currencies in the region, including the Taiwan dollar, dealers said.

Under the QE3 program, the Fed will spend US$40 billion a month to buy mortgage-backed securities for however long it deems necessary.

Bank of Japan followed the Fed's lead, announcing Wednesday an increase of its asset-purchase funds by 10 trillion Japanese yen to boost its economy, a move that is expected to further increase liquidity in the region, dealers said.

The intervention by the local central bank also signaled its intention to keep the Taiwan dollar from rising to more than NT$29.50 against the U.S. currency, they said.

Before the central bank stepped in, the U.S. dollar continued its downward trend in the local foreign exchange market as traders took cues from a rising Chinese yuan, dealers said.

The Chinese currency has risen to a five-month high on expectations that China will soon come up with more stimulus measures, particularly after a preliminary report by HSBC showed that the country's manufacturing activity remained slow, they said.

Despite the central bank's intervention, turnover in the local foreign exchange market remained moderate as many traders stayed on the sidelines ahead of the conclusion of the bank's quarterly policymaking meeting later in the day, dealers said.

(By Kao Chao-fen and Frances Huang)
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