U.S. dollar dips to 2.5 year low on Taipei forex market

09/15/2020 08:43 PM
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CNA file photo
CNA file photo

Taipei, Sept. 15 (CNA) The U.S. dollar came under heavy pressure in the wake of continued fund inflows, dropping to its lowest in almost two and a half years against the Taiwan dollar on Tuesday, dealers said.

The greenback ended down NT$0.106, or 0.36 percent, to close at NT$29.380 against the Taiwan dollar after moving between NT$29.199 and NT$29.470.

The latest closing level was the lowest since April 19, 2018, when the U.S. unit ended at NT$29.340 against its Taiwanese counterpart.

Tuesday's downturn suffered by the U.S. dollar was the largest fall in four-and-a-half months.

The U.S. dollar encountered selling soon after the local market opened, as foreign investors kept moving funds into the regional markets, and fell to the day's low in the early morning session, the dealers said.

In addition to the large fund inflows, the dealers said the strength of the Chinese yuan also gave a strong incentive for traders to pocket more of other regional currencies, including the Taiwan dollar.

In the wake of the plunge suffered by the U.S. dollar due to foreign fund inflows, Taiwanese exports rushed to dump their greenbacks in exchange for Taiwan dollars amid fears that they will record more foreign exchange losses caused by a weakening U.S. dollar, the dealers said.

They said that unlike in recent sessions, the central bank seemed to make less of an effort to cap the fall of the U.S. dollar Tuesday, prompting more sell-offs in the greenback throughout the session.

Witnessing the significant climb of the Taiwan dollar against the U.S. dollar, Alex Ko (柯拔希), chairman of the Taiwan Association of Machinery Industry, urged the central bank to take action to keep the Taiwan dollar weaker, or Taiwanese machinery exporters will lose their global competitive edge.

Ko said he fears that Taiwanese machinery suppliers will see orders going to their South Korean rivals, as the Taiwan dollar has been stronger than the South Korean won.

He said that once orders are lost, they are hard to restore, so the central bank should give these exporters a hand.

The Central Bank has scheduled a quarterly policymaking meeting for Thursday and the dealers said the market has been anxiously awaiting comments from Governor Yang Chin-long (楊金龍) of the bank on the forex market. His comments are expected to move the Taiwan dollar.

(By Pan Tzu-yu, Chung Jung-feng and Frances Huang)

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