Taipei, Feb. 6 (CNA) The U.S. dollar rose against the Taiwan dollar Tuesday, gaining NT$0.079 to close at NT$29.386 as foreign investors moved funds out of the region to meet redemption needs back home following massive losses on Wall Street overnight, dealers said.
Heavy selling by foreign institutional investors of local equities also increased pressure on the Taiwan dollar and gave an additional boost to the U.S. dollar, helping the U.S. currency close at its highest since Jan. 23, when the unit stood at NT$29.402 against the Taiwan dollar, they said.
The greenback opened at NT$29.400, and moved between NT$29.350 and NT$29.415 before the close. Turnover totaled US$1.215 billion during the trading session.
Soon after the local foreign exchange market opened, the U.S. dollar attracted buying with traders expecting fund flight in the wake of the plunge on Wall Street, with foreign investors needing funds to meet demand for redemption back home, dealers said.
The Dow Jones Industrial Average closed down 1,175.21 point or 4.6 percent overnight amid rising fears over a quicker interest rate hike cycle by the Federal Reserve after Washington reported stronger-than-expected jobs data for January.
Most currencies in the region, including the South Korean won, which the Taiwan dollar follows closely, also lost ground amid turmoil in global financial markets, which gave another indication to local traders to dump the local currency, dealers said.
Following the Dow's plunge, the weighted index on the Taiwan Stock Exchange ended down 542.25 points, or 4.95 percent on massive foreign institutional selling, which pushed the Taiwan dollar down further, dealers added.
According to the Taiwan Stock Exchange, foreign institutional investors sold a net NT$31.26 billion (US$1.06 billion) worth of shares on the main board Tuesday.
Dealers said if volatility on Wall Street continues to force foreign investors to repatriate more of their funds, regional currencies will come under sustained downward pressure.
(By Chiu Po-sheng and Frances Huang)
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