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U.S. dollar recoups early losses after volatile session

2018/01/22 20:44:56

Taipei, Jan. 22 (CNA) The U.S. dollar rose against the Taiwan dollar Monday, gaining NT$0.002 to close at NT$29.432 after a volatile session, recouping earlier heavy losses by the end of trading.

Dealers said the local central bank took to the trading floor in the afternoon session, helping the U.S. dollar recover a loss of NT$0.23 against the Taiwan dollar earlier Monday.

The earlier weakness reflected continued foreign fund inflows on a day when the local equity market finished at the highest in almost 28 years, while losses suffered by other regional currencies let some air out of the Taiwan dollar during the session, dealers added.

Due to the intervention of the central bank, the U.S. dollar fluctuated by 0.85 percent against the Taiwan dollar before the close.

The greenback opened at the day's high of NT$29.450, and moved to a low of NT$29.200 before the session ended. Turnover totaled US$1.105 billion.

Soon after the local foreign currency market opened, the U.S. dollar faced strong selling as local traders witnessed foreign investors moving more funds into the local market, dealers said.

On the back of further foreign institutional buying, the weighted index on the main board continued to set records, closing up 0.72 percent at the day's high of 11,231.46, the highest since March 21, 1990, when the index ended at 11,257.23.

According to the Taiwan Stock Exchange, foreign institutional investors bought a net NT$2.55 billion (US$86.64) worth of shares on the main board on Monday.

Dealers said the central bank stepped in during the afternoon session in a bid to mitigate the impact of a stronger Taiwan dollar on Taiwan's global competitive edge.

The central bank even took advantage of outward remittances of funds by local oil importers for overseas purchases, which made the intervention easier, dealers said.

They said due to a booming local equity market and a weaker U.S. dollar index, which tracks the currencies of Washington's six major trading partners, more foreign fund inflows are likely.

Along with seasonal fund demand from Taiwanese exporters ahead of the Lunar New Year holiday, the U.S. dollar is expected to resume its downtrend soon so the central bank could yet re-enter the market to bolster the greenback and lower the impact on Taiwan's exports, they said.

(By Chiu Po-sheng and Frances Huang)