US dollar rises up to NT$31.330 on the Taipei forex
The U.S. dollar rose against the New Taiwan dollar Wednesday, gaining NT$0.018 to close at the day’s high of NT$31.330, as heavy foreign institutional investor selling on the stock market led traders to cut their holdings in the local currency.
Market sentiment toward the New Taiwan dollar turned cautious amid concerns over the regional economic climate after China reported a six-year quarterly low in gross domestic product (GDP) growth for the first quarter, dealers said.
The greenback opened at NT$31.315 and moved to a low of NT$31.220 before rebounding. Turnover totaled US$689 million during the trading session.
The U.S. dollar opened higher on a technical rebound from losses seen a session earlier but soon fell into negative territory as an early upturn in the local bourse sparked demand for the New Taiwan dollar, dealers said.
That soon changed, however, after the stock market went into a sessionlong tailspin at about 9:30 a.m., driven by a massive sell-off by foreign institutional investors that primarily targeted the bellwether electronics sector.
According to the Taiwan Stock Exchange, foreign institutional investors sold a net NT$21.62 billion (US$690 million) in shares Wednesday, putting pressure on the New Taiwan dollar and boosting demand for the greenback, they said.
Intervention by Taiwan’s central bank further fueled selling in the New Taiwan dollar late in the trading session. Seeing weakness in the South Korean won, the bank bid down the New Taiwan dollar to maintain the competitiveness of Taiwan’s exporters against their Korean rivals.
Despite the central bank intervention, however, turnover in the local foreign exchange market remained moderate as some traders stayed on the sidelines amid concerns over the regional economy, dealers said.
Such worries were triggered by China’s announcement that its GDP grew 7 percent in the first quarter, lower than 7.3 percent recorded in the previous quarter.
The first quarter figure was the slowest growth since the first quarter of 2009, when China’s economy grew 6.6 percent.
Still, many traders expect Chinese authorities to come up with new stimulus measures to boost its GDP for the rest of the year, dealers said.