Sun, Oct 15, 2017 - Page 14 News List

NT dollar gains on greenback

INFLATION:The US Department of Labor’s consumer price index last month rose less than expected, which could influence the US Federal Reserve’s timetable for rate hikes

Staff writer, with CNA and Reuters

The New Taiwan dollar on Friday rose against the US dollar, gaining NT$0.028 to close at NT$30.185 on the back of strength of other currencies in the region, dealers said.

The NT dollar closed at US$30.376 on Friday last week.

Foreign institutional buying in local equities also placed downward pressure on the US dollar throughout the session, sending the currency to a low not seen since Sept. 25, when the unit closed at NT$30.172, the dealers said.

The greenback opened at the day’s high of NT$30.219 and moved to a low of NT$30.162 before rebounding. Turnover totaled US$697 million during the trading session.

Soon after the local foreign exchange market opened, the US dollar came under pressure as traders were motivated by gains posted by other regional currencies to pick up the NT dollar, the dealers said.

The upturn in the regional currencies reflected optimism toward the economic fundamentals in the region after China, the second-largest economy in the world, reported an 18.7 percent increase in imports for last month, beating an estimate of a 13.5 percent rise, as many Chinese firms increased their production equipment purchases, the dealers said.

Meanwhile, further foreign institutional buying in the local equity market, with investors continuing to pick up select high-tech stocks, prompted currency traders to raise their holdings in the NT dollar throughout the session, they added.

Foreign institutional investors bought a net NT$2.65 billion (US$87.79 million) of shares on the main board, sending the TAIEX up 0.12 percent at the close of Friday trading. Thursday’s foreign net buy totaled NT$6.28 billion.

Despite the fluctuations of the US dollar, turnover remained moderate, as many traders stayed on the sidelines waiting for the release of inflation data from Washington later in the day, which could serve as one of the critical indications for the US Federal Reserve to adjust its monetary policy, the dealers said.

In addition, the currency market was also watching closely how the US would report its retail data to determine its economic climate, the dealers added.

Elsewhere later on Friday, the US dollar was little changed against a basket of currencies, shaking off early weakness after data showed US consumer prices rose less than expected last month, pointing to muted inflation that could worry Fed officials.

The US Department of Labor on Friday said its consumer price index last month jumped 0.5 percent after advancing 0.4 percent in August.

Economists polled by Reuters had forecast a 0.6 percent increase.

Last month’s increase was the biggest in eight months, but it stemmed mostly from soaring gasoline prices after hurricane-related production disruptions at oil refineries in the US Gulf Coast area. Underlying inflation remained muted.

The US dollar index, which tracks the greenback against six major currencies, was up 0.02 percent at 93.072 after falling to a more than two-week low of 92.749. The index was down about 0.75 percent for the week, its worst weekly performance in five.

“We did see a knee-jerk reaction that was perhaps overdone. On more sober reflection, traders are coming to bid up the [US] dollar,” said Karl Schamotta, director of global product and market strategy at Cambridge Global Payments in Toronto.

The Fed has raised its benchmark rate twice this year and signaled a third hike later this year.

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