Sun, Mar 05, 2017 - Page 14 News List

Greenback rises as regional fund outflows continue

Staff writer, with CNA and Reuters

The US dollar on Friday rose against the New Taiwan dollar, gaining NT$0.225 to close at NT$31.020, as local traders were motivated by further fund outflows from the region to cut their holdings in the local currency, dealers said.

Losses suffered by other regional currencies gave traders an additional hint to sell the NT dollar in exchange for the US dollar throughout the session, amid rising fears that the US Federal Reserve will raise its key interest rates later this month, the dealers said.

Foreign institutional selling in the local stock market pushed the NT dollar even lower, which led the US dollar to close at a new high since Feb. 13, when the greenback ended at NT$31.030 against its Taiwanese counterpart, they said.

The greenback opened at the day’s low of NT$30.830 and moved to the day’s high of NT$31.520 before the close. Turnover totaled US$1.227 billion during the trading session.

Soon after the local foreign exchange market opened, the US dollar extended its momentum from a session earlier to move higher on the back of more fund outflows prompted by concerns over a possible interest rate hike by the Fed, the dealers said.

Fed officials seem to have become hawkish on a move to tighten monetary policy at a time when the US economy has been on the road to recovery, and their comments have made many currency traders wary of the movement of non-US dollar currencies, the dealers said.

Under such circumstances, the South Korean won, which the NT dollar tracks closely, fell more than 1 percent against the US dollar at one point, so that traders rushed to cut their holdings in the local currency, the dealers said.

Foreign institutional selling in local equities also created more losses for the NT dollar, as many large-cap stocks moved lower, the dealers added.

The US dollar slipped against a basket of major currencies on Friday after Fed Chair Janet Yellen said that raising interest rates this month would be appropriate as long as the US economy continues to improve as expected.

Yellen’s remarks followed hawkish comments in recent days from a slew of Fed speakers and cement a likely rate hike at the Fed’s next meeting on March 15.

Analysts said the rate increase had largely been priced in before Yellen’s comments, sending the US dollar lower on Friday afternoon as some investors took profits.

“There’s a lot of positive news now priced into the market, and I think we’ll probably see some profit-taking, so I think we’ll probably see the [US] dollar weaken from here,” Chapdelaine Foreign Exchange managing director Douglas Borthwick said in New York.

Yellen also said rates are likely to rise faster this year, as the economy for the first time in her tenure appears clear of any imminent hurdles at home or abroad.

“Yellen’s comments have caught up with market expectations, in that she’s looking for three rate moves this year,” Borthwick said.

The US dollar index, which measures the greenback against a basket of six major currencies, was down 0.7 percent. It is up about 0.4 percent this week, and on Thursday hit a seven-week high of 102.26.

Futures traders now are pricing in an 86 percent chance of a Fed hike this month, up from 35 percent on Tuesday, according to the CME Group’s FedWatch Tool.

Against the Japanese yen, the greenback was down 0.24 percent to ¥114.02 on Friday.

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