The New Taiwan dollar yesterday fell against the US dollar, down NT$0.016 to close at the day’s high of NT$33.667, an almost seven-year low, on the back of continued intervention by the central bank, dealers said.
Despite the central bank’s buying, turnover remained moderate ahead of an expected speech by US Federal Reserve Vice Chairman Stanley Fischer, who was expected to focus on the Fed’s policy and interest rates.
Turnover totaled US$694 million during the trading session.
The US dollar opened lower against the NT dollar on a technical rebound as traders in Taipei locked in the gains they had built up a session earlier, and selling continued in the wake of the strength of the Japanese yen, the dealers said.
While the People’s Bank of China cut the Chinese yuan slightly lower against the US dollar, the slight change failed to give any meaningful indication to traders, so that after the earlier losses, the greenback then moved in a narrow range for most of the session in the local market, the dealers said.
Before the central bank’s intervention in Taipei, the US dollar had some breathing room as foreign institutional investors continued to stay on the sell side on the local equity market, the dealers said.
According to the Taiwan Stock Exchange, foreign institutional investors yesterday sold a total of NT$3.16 billion (US$93.86 million) after a net sell of NT$9.84 billion on Monday.
After witnessing the US dollar falling below the NT$33.5 mark, the central bank jumped onto the trading floor again in a bid to slow the pace of the NT dollar’s appreciation and protect local exporters, the dealers said.
The central bank’s buying turned more visible in the late trading session, vaulting the US dollar back to the NT$33.6 level and moving the unit even closer to the NT$33.7 mark at the end of the session.
It was the second consecutive session in which the US dollar had closed higher against the NT dollar due to the central bank’s intervention, and more buying of the greenback by the central bank is possible to keep the NT dollar even cheaper, the dealers said.
The moderate turnover also reflected caution on the part of traders before a speech scheduled to be given by Richmond Fed President Jeffrey Lacker, which could provide more clues about whether the Fed will implement an interest rate hike cycle, the dealers said.
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