Taipei, July 21 (CNA) The U.S. dollar breached the NT$30.70 mark against the Taiwan dollar on Friday, the highest level in 16 months, as regional currencies dropped during the week, dealers said.
Buying in the U.S. dollar strengthened as foreign investors remitted their funds after receiving large cash dividends from their investments in some listed companies in Taiwan, dealers said.
On Friday, the U.S. dollar closed at NT$30.716, up NT$0.084 or 0.27 percent, against the Taiwan dollar after moving between NT$30.630 and NT$30.750.
Over the week, the greenback gained NT$0.16 or 0.52 percent against the Taiwan dollar, rising to its highest level since March 15, 2017, when it ended at NT$30.840.
Dealers said currency traders cut their holdings in the Taiwan dollar in almost all five trading sessions this week on the local foreign exchange market due to a falling Chinese yuan.
The yuan dropped throughout the week, as the People's Bank of China lowered the reference rate for the currency against the U.S. dollar for seven trading sessions in a row, and closed down about 1.31 percent this week.
Against that backdrop, other regional currencies, including the Taiwan dollar, were eroded amid worry that China would resort to currency depreciation to cushion the impact of its trade tensions with the United States, dealers said.
The Taiwan dollar was also affected by foreign fund outflows this week as a result of the current cash dividend season, dealers said.
In particular, contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) on Thursday issued more than NT$200 billion (US$6.51 billion) in cash dividends for its 2018 earnings.
Since foreign institutional investors accounted for about 80 percent of TSMC's outstanding shares, they pocketed about NT$160 billion in cash dividends on Thursday and started to remit the funds, which placed heavy downward pressure on the Taiwan dollar, dealers said.
Dealers said some market heavyweights such as Cathay Financial Holding Co., Fubon Financial Holding Co., Formosa Plastics Corp. and Formosa Petrochemical Corp. will issue their cash dividends soon, and foreign investors are expected to also move those funds out of the country.
Moreover, the yuan is likely to continue to depreciate against the U.S. dollar, adding more downward pressure on the Taiwan dollar down the road, dealers said.
As a result, the U.S. dollar is likely to move even higher against the Taiwan dollar soon, they said.
On Friday, U.S. Treasury Secretary Steven Mnuchin was cited by Reuters as saying that the U.S. is closely monitoring whether China was manipulating the foreign exchange value of the yuan.
(By Tsai Yi-chu and Frances Huang)Enditem/pc