U.S. dollar soars in Taipei trading amid large fund outflow

Taipei, July 20 (CNA) The U.S. dollar surged against the Taiwan dollar Monday morning as foreign institutional investors continued moving funds out of Taiwan following a record-high net sell on Friday, when the local main board recorded its steepest-ever single-session decline.

Soon after the market opened, the greenback breached the NT$32.400 mark against the Taiwan dollar. By 10:30 a.m., it stood at NT$32.421 against the Taiwan dollar, rising NT$0.133 from a session earlier.

The strength of the U.S. dollar on Monday came after the currency rose NT$0.110 or 0.34 percent against the Taiwan dollar last week, marking a fourth consecutive weekly increase.

On Friday, foreign institutional investors sold a net NT$189.04 billion of shares on the local main board, as the Taiex, the Taiwan Stock Exchange's benchmark index, ended down 2,953.71 points, or 6.47 percent, to close at 4,2671.27.

The sell-off focused on large-cap semiconductor stocks, including contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), which tumbled 7.29 percent amid growing worries that massive capital expenditure will erode profit margins.

After failing to move all their funds at the end of last week, foreign institutional investors continued selling on Monday, imposing additional downward pressure on the Taiwan dollar.

Dealers said that foreign institutional investors also kept moving recently received cash dividends from Taiwan-based investments, driving the U.S. dollar higher.

Worries about the hawkish tone taken by some U.S. Federal Reserve officials on tackling inflation amid escalating military conflicts in the Middle East drove the Taiwan dollar lower still, dealers added.

Market watchers said that the U.S. dollar is expected to keep moving higher to challenge the NT$35.2 mark over the short term, adding that a return to stability for the Taiex will likely prove critical for the Taiwan dollar's own fluctuations.

As of 10:30, the Taiex fell 0.40 percent to 42.2501.20 points after falling from an initial mild technical rebound.