US dollar declines to NT$31.062 in Taipei
The U.S. dollar fell against the New Taiwan dollar Thursday, shedding NT$0.199 to close at NT$31.062, after the U.S. Federal Reserve implied overnight that it will raise interest rates gradually, dealers said.
The dovish approach by the Fed prompted traders in the region to lower their U.S. dollar holdings, which pushed up the currencies in the region, including the New Taiwan dollar, dealers said.
Amid worry over the effects of a stronger New Taiwan dollar, the local central bank continued its intervention in the market to prop up the U.S. dollar, helping the unit recover some of its earlier losses by the close, they added.
The greenback opened at NT$31.261, and moved between NT$30.788 and NT$31.269 before the close. Turnover totaled US$912 million during the trading session.
The U.S. dollar opened flat against the New Taiwan dollar, but soon fell into the red as traders here took cues from remarks by Fed Chairwoman Janet Yellen, and dumped their greenback holdings, dealers said.
After the Fed’s two-day policymaking meeting, Yellen said the market should focus on the pace and trajectory of interest rate increases rather than the timing of the initial hike, which led investors to think that the Fed would raise interest rates gradually.
Dealers said bullish currency traders were disappointed by Yellen’s statement, which triggered selling in the U.S. currency.
Foreign banks in Taiwan also shifted to the sell side of the U.S. dollar, dealers said.
In the region, the South Korean won and Japanese yen got a significant boost from Yellen’s statement, and the strength of the two currencies gave a strong hint to traders here to buy into the New Taiwan dollar, dealers said.
At one point, the U.S. dollar fell below the NT$30.80 mark, prompting the local central bank to enter the trading floor at the end of the morning session, dealers said. The central bank’s presence remained evident during the afternoon session, they said.
Despite the strong showing of the New Taiwan dollar, market sentiment remained cautious ahead of a finance ministers meeting in the eurozone later in the day to discuss the Greece debt problem, dealers said.