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Taipei, Aug. 19 (CNA) The U.S. dollar came under heavy downward pressure Monday, plunging to its lowest against the Taiwan dollar for more than four months amid high hopes that the U.S. Federal Reserve will start to cut interest rates in September, dealers said.
The greenback fell NT$0.258, or 0.81 percent, against the Taiwan dollar to close at NT$32.030, the lowest level since April 10, when the American unit ended at NT$32.020.
The U.S. dollar dipped to a low of NT$32.023 at one point but the local central bank stepped in to cap the downturn by the end of the trading session, dealers said.
The American currency faced heavy selling soon after the local foreign exchange market opened, as investors seized on slower growth in recent U.S. producer price index and consumer price index figures to cut their holdings in the greenback, dealers said.
Dealers said the market widely anticipates the Fed will kick off a rate cut cycle in September, but is looking for more clues about how the American central bank will execute the rate cut cycle.
The Fed rate cut hopes prompted foreign institutional investors to move funds into the region, sending the U.S. dollar into a tailspin across the region, dealers said.
Investors simply took their cues from a fall of 0.76 percent in the U.S. dollar index, which tracks the value of the greenback against the currencies of Washington's top six trading partners, to buy into the Taiwan dollar, dealers said.
The Taiwan dollar received another boost as other regional currencies strengthened against the U.S. dollar, dealers added.
On Monday, the South Korean won rose 1.52 percent against the U.S. dollar and the Japanese yen gained 1.98 percent. In addition, the Chinese yuan also moved up by 0.38 percent against the greenback.
Dealers said it is very possible the U.S. dollar will fall further and test the NT$31 mark against the Taiwan dollar in the short term.
Investors are watching closely what Fed Chair Jerome Powell says in the Aug. 22-24 annual economic policy symposium in Jackson Hole, Wyoming, for a better guess about upcoming monetary policy adjustments.
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