US dollar closes higher on forex at NT$31.226
The U.S. dollar rose against the Taiwan dollar Friday, gaining NT$0.064 to close at the day’s high of NT$31.226 after moving in a quiet session, with moderate trading volume, dealers said.
After spotting the weakness of other regional currencies, Taiwan’s central bank made its presence felt in the latter part of the trading session, dumping the Taiwan dollar to vault the U.S. dollar back into positive territory at the close, the dealers said.
The greenback opened at NT$31.200 and moved to a low of NT$30.884 before rebounding. Turnover totaled US$512 million during the trading session.
The U.S. dollar opened higher against the New Taiwan dollar, but soon fell into the red as the local currency staged a technical rebound from a slump seen a session earlier, when the local central bank’s intervention pushed down the country’s unit, the dealers said.
The central bank was motivated by losses incurred by other regional currencies, in particular the Japanese yen and the South Korean won, to cut its holdings in the New Taiwan dollar amid lingering concerns over the debt problems in Greece, they said.
Worries over a default by Greece on its massive debt have been raised by a lack of a meaningful progress in the ongoing financial aid negotiations between the European country and its creditors, the dealers said.
Market sentiment was haunted by comments made by a spokesman for the International Monetary Fund who said that there have been “major differences” in the talks that will need to be dealt with, they said.
Before the central bank’s intervention, foreign institutional selling in the local equity market deflated the New Taiwan dollar to some extent, the dealers said.
According to the Taiwan Stock Exchange, foreign institutional investors sold a net NT$4.66 billion (US$149 million)-worth of local shares on the main board Friday.
Since the market has anticipated that the U.S. will start to raise interest rates later this year, a stronger U.S. dollar could raise a currency depreciation competition in the region, and the local central bank is likely to exercise more intervention, the dealers said, adding that NT$31 to the greenback is a possible bottom line for Taiwan’s central bank in the near term.