The US dollar yesterday rose against the New Taiwan dollar in Taipei, gaining NT$0.129 to close at NT$31.801, as renewed fears over a US Federal Reserve rate hike pushed the NT dollar down to a one-week low, dealers said.
The weakness of other regional currencies and selling by foreign institutional investors in the local equity market gave an additional boost to the US dollar, lifting it to its highest level since Monday last week, when it closed at NT$31.820, dealers said.
The greenback opened at NT$31.860 and moved between NT$31.780 and NT$31.878 before the close. Turnover for the session totaled US$912 million.
Soon after the market opened, the US dollar extended its momentum from the previous session and continued to gain as traders cut their NT dollar holdings on cues from speech by Fed Chair Janet Yellen on Friday.
Speaking at the annual central bankers’ meeting in Wyoming, Yellen said the US economy has been improving and she thinks “the case for an increase in the [US] federal funds rate has strengthened in recent months.”
Her comments prompted many currency traders in the region to reduce their holdings in regional currencies, dealers said.
The South Korean won, which the NT dollar tracks closely, also suffered sales, indicating to traders in Taiwan that they should dump the NT dollar, dealers said.
On the main board yesterday, foreign institutional investors shifted to the sell side, recording net sales of NT$1.33 billion (US$41.82 million) worth of shares, which helped send the TAIEX down 0.24 percent at the close, and put more pressure on the NT dollar, dealers said.
However, after the US dollar breached the US$31.80 mark, some Taiwanese exporters jumped onto the trading floor, taking advantage of the US dollar gains by exchanging their US currency holdings for the NT dollar, dealers said.
The exporters’ move helped the NT dollar recoup some of its early loses, dealers said.
In Europe, the dollar yesterday rose to a three-week high against the yen.
Amid thin volumes in Europe, with London shut for a public holiday, the dollar rose 0.5 percent to ¥102.39, its highest since Aug. 9. Against a basket of major currencies, it was trading a touch firmer at ¥95.608, its highest in nearly two weeks.
Additional reporting by Reuters
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