Sun, Jan 21, 2018 - Page 14 News List

NT dollar hits highest since late 2013

‘POLITICAL EVENT’:The US dollar held steady against a basket of major currencies, despite the impending government shutdown after the US Congress hit an impasse

Staff writer, with CNA and Reuters

The New Taiwan dollar on Friday rose to its highest against the US dollar in more than four years on the back of more foreign fund inflows, dealers said, with the greenback shedding NT$0.132 to close at NT$29.430.

In addition to foreign fund inflows, the downward pressure on the US dollar also reflected the strength of other regional currencies and strong foreign institutional buying of local equities, they said.

Meanwhile, seasonal fund demand from local exporters as the Lunar New Year holiday approaches also boosted the NT dollar throughout the session, they added.

The US dollar closed at its lowest since Oct. 23, 2013, when the greenback ended at NT$29.425 against the NT dollar.

For the week, the US dollar fell NT$0.170, or 0.58 percent, against the NT dollar from a close of NT$29.600 on Jan. 12.

On Friday, the greenback opened at NT$29.550 and moved between NT$29.387 and NT$29.553 before the close. Turnover totaled US$1.193 billion during the trading session.

Soon after the local foreign exchange market opened, the US dollar faced strong selling as foreign investors moved funds into the region, with the US dollar index, which tracks the currencies of Washington’s six top trading partners, continuing to weaken, dealers said.

A weaker US dollar index gave foreign investors a larger appetite to take risks by parking their funds in non-greenback assets, such as the NT dollar, they said.

A strong showing by the local equity market on the back of massive foreign institutional buying gave an additional boost to the NT dollar, dealers said.

Foreign institutional investors bought a net NT$8.62 billion (US$292.9 million) of shares on the main board, sending the TAIEX up 0.72 percent at the end of the session on Friday, the Taiwan Stock Exchange said.

Fund demand from local exporters is expected to continue to push the US dollar down ahead of the Lunar New Year holiday, which is to start on Feb. 15, dealers said.

Elsewhere on Friday, the US dollar held steady above a three-year low versus a basket of currencies, marking a fifth week of falls and its longest losing streak since May 2015, as worries over a US government shutdown weighed.

On Thursday, the US House of Representatives passed a bill to fund government operations through Feb. 16 and avoid agency shutdowns from yesterday, when existing allocations expire.

However, the measure was not approved by the US Senate, despite 11th-hour negotiations between Republicans and Democrats on Friday.

Senate Minority Leader Chuck Schumer had earlier on Friday met with US President Donald Trump to find ways to avert a shutdown.

Schumer suggested some progress had been made, but they still had “a good number of disagreements.”

“At the start of the week, it was an outside risk. Now it’s a real risk,” Credit Agricole New York-based currency strategist Vassili Serebriakov said of a government shutdown.

Even as the likelihood of a shutdown grew, the greenback managed to hold steady against a group of major currencies on a trade-weighted basis.

Some investors downplayed a possible shutdown, saying the market impact would be mild anyway.

“It’s more a political event than an economic one,” said Alessio de Longis, portfolio manager for OppenheimerFunds Inc’s global multi-asset group. “We have been in this situation before.”

At 3:26pm in New York, the trade-weighted US dollar index was up 0.06 percent at 90.591.

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