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U.S. dollar falls to 5-year low after volatile session in Taipei

2018/01/23 20:32:02

Taipei, Jan. 23 (CNA) The U.S. dollar fell against the Taiwan dollar Tuesday, shedding NT$0.030 to close at NT$29.402, its lowest level in five years on the back of further foreign fund inflows into the country, dealers said.

Although the U.S. dollar recovered most of its earlier losses it still ended the day at its lowest since Jan. 25, 2013, when the U.S. currency closed at NT$29.250 against the Taiwan dollar.

The strength of the U.S. dollar was capped due to intervention by the central bank aimed at slowing the pace at which the Taiwan dollar appreciates, in a bid to boost the country's competitive edge on the global market, dealers said.

The greenback opened at NT$29.300, and moved between NT$29.114 and NT$29.403 before the close. Turnover totaled US$1.477 billion during the trading session.

Soon after the local foreign exchange market opened, the U.S. dollar encountered heavy downward pressure as foreign investors remitted funds into the country to tap the equity market, dealers said.

With a weak U.S. dollar index, which tracks the currencies of Washington's six major trading partners, foreign investors moved more funds into non-U.S. dollar assets, dealers added.

As the local equity market once again hit a near 28-year high, foreign institutional buying gave a big boost to the Taiwan dollar and pushed the U.S. dollar down, they said.

According to the Taiwan Stock Exchange, foreign institutional investors bought a net NT$5.16 billion (US$175 million) worth of shares on the main board, sending the weighted index up 0.19 percent at the close on Tuesday.

To reduce the impact of a stronger Taiwan dollar on local exporters, the central bank intervened before the market's morning session closed and its presence continued into the afternoon session, dealers added.

In addition to the central bank's intervention, dealers said, many importers and life insurers also entered the market as they took advantage of a lower U.S. dollar, which fell to about NT$29.1, in a bid to pocket more greenbacks to meet their overseas fund needs.

The involvement of the central bank, the importers and life insurers boosted Tuesday's turnover sharply, dealers added.

Dealers said after recent heavy losses, the U.S. dollar could see strong technical support ahead of the NT$29 mark.

(By Chiu Po-sheng and Frances Huang)