Taiwan dollar tops Asian currencies as US dollar drops below NT$32

Taipei, Aug. 17 (CNA) The U.S. dollar fell sharply against the Taiwan dollar Monday, dipping below the NT$32 mark for the first time in more than a month as weaker-than-expected U.S. retail sales for July dimmed expectations of a Federal Reserve rate hike, dealers said.

The U.S. dollar depreciated against the Taiwan dollar for the fourth consecutive session Monday, making the Taiwan dollar the strongest currency in Asia in the day.

After opening at the day's high of NT$32.020, the greenback closed down NT$0.194, or 0.61 percent, at NT$31.852, marking the first time that the U.S. currency had ended below NT$32 since July 3, when it closed at NT$31.930.

The U.S. dollar came under heavy downward pressure soon after the local foreign exchange market opened, with selling sparked by weakness in the U.S. dollar index, dealers said.

The U.S. dollar index, which tracks the greenback against the currencies of six major U.S. trading partners, fell 0.38 percent after July retail sales unexpectedly dropped 0.6 percent, the largest decline in more than a year, reducing expectations that the Fed would raise rates in September, dealers added.

Dealers said the retail sales data dealt another blow to the U.S. dollar following weaker-than-expected U.S. inflation data for July released last week.

Although the Taiex, the Taiwan Stock Exchange's benchmark index, gave up most of its earlier gains to close only 0.10 percent higher Monday, foreign institutional investors remained net buyers, purchasing a net NT$45.45 billion worth of shares on fund inflows to further strengthen the Taiwan dollar, dealers said.

Dealers said investors should closely watch the minutes of the Fed's July policymaking meeting, due Wednesday, for more clues about the U.S. central bank's next move.

They added that investors should also monitor the Taiex and whether foreign institutional investors continue moving funds into Taiwan, which could help keep the U.S. dollar below the NT$32 mark for the rest of the week.

Since the beginning of the year, the U.S. dollar has risen 1.30 percent against the Taiwan dollar.