US dollar rises up to NT$31.330 on the Taipei forex

The China Post - - TAIWAN BUSINESS -

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.

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