US dollar soars to end at day’s high of NT$32.465
The U.S. dollar rose against the New Taiwan dollar Wednesday, gaining NT$0.385 to close at the day’s high of NT$32.465, after China’s central bank further cut the yuan’s reference rate, sending regional currencies into another tailspin, dealers said.
Massive selling by foreign institutional investors on the local equity market added downward pressure on the New Taiwan dollar to push the the U.S. dollar even higher, they said.
The greenback opened at NT$32.130, and moved between NT$31.970 and NT$32.465 before the close. Turnover totaled US$1.825 billion during the trading session.
The U.S. dollar opened higher against the New Taiwan dollar on follow-through buying from a session earlier, and momentum accelerated as traders rushed to sell the local currency after the People’s Bank of China (PBOC) cut the yuan’s reference rate sharply for the second day in a row, dealers said.
The Chinese central bank set the yuan’s reference rate 1.62 percent lower on Wednesday than on Tuesday, when the reference figure was slashed 1.86 percent.
The deep cuts signaled China’s intentions to use a cheaper currency to boost its exports at a time when its economy has showed signs of a slowdown, dealers said.
The weakness of the yuan led to selling in other regional currencies and set off a currency depreciation competition.
Among the falling regional units, the South Korean won’s steep losses against the greenback prompted traders here to dump more of their New Taiwan dollar holdings, dealers said.
A falling New Taiwan dollar has led foreign investors to move their funds out of the country, reducing demand for the local currency.
According to the Taiwan Stock Exchange, foreign institutional investors sold a net NT$8.79 billion (US$271 million) in shares on the exchange Wednesday, sending the weighted index down 1.31 percent at the close.
A woman fans out an assortment of New Taiwan dollar and U.S. dollar notes in this photo taken in Taipei, yesterday.