U.S. dollar surges against Taiwan dollar to a half-month high

Taipei, June 8 (CNA) The U.S. dollar rose sharply against the Taiwan dollar on Monday to close at its highest level since May 22 amid a massive outflow of funds from the country because of investors panicking over global equity markets.

The greenback ended at NT$31.580, slightly higher than a previous record of NT$31.568 seen on May 22, after moving between NT$31.500 and NT$31.648 on combined turnover of US$3.062 billion on the Taipei Foreign Exchange and the Cosmos Foreign Exchange.

The U.S. dollar got a significant boost in the morning session, soaring as much as NT$0.173 at a time when other Asian currencies also faced downward pressure, dealers said.

But the surge led many Taiwanese exporters to dump their U.S. dollars in exchange for more Taiwan dollars, which helped the local currency recoup part of its losses, dealers added.

In addition, the local central bank also stepped in by selling the U.S. dollar and buying the Taiwan dollar to cap the greenback's gains by the end of the session, dealers said.

But movements on Taiwan's stock market drove up demand for the U.S. dollar.

Foreign institutional investors sold a net NT$93.85 billion in shares on Monday as the Taiwan Stock Exchange's benchmark index, the Taiex, plunged 2,694 points at one point before rebounding to close down 1,568.16 points, or 3.48 percent, at 43,502.78.

The selling came as foreign institutional investors scrambled to move their funds out of Taiwan during the session to meet redemption needs back in the United States after Friday's heavy losses, dealers said.

That pushed demand for the U.S. dollar higher, helping drive its value against the Taiwan dollar up, they said.