The New Taiwan dollar on Friday fell against the US dollar, losing NT$0.048 to close at NT$30.277 as traders disposed of the local unit, taking cues from the weakness of other regional currencies, dealers said.
For the week, that was an increase of 0.1 percent from a close of NT$30.241 on Oct. 20.
The selling in the NT dollar reflected fears of foreign fund outflows as the US dollar index, which tracks the currencies of Washington’s six trading partners, strengthened, dealers said.
On Friday, the greenback opened at the day’s high of NT$30.320 and moved to a low of NT$30.260 before rebounding. Turnover totaled US$589 million during the session.
Soon after the local foreign exchange market opened, the greenback was boosted by the weakness of regional currencies, which gave traders a clear indication to cut their NT dollar holdings, dealers said.
The weakness of the regional currencies was due to a spike in the US dollar index after the European Central Bank (ECB) decided to extend its bond-buying program by nine months to September next year, but cut the monthly amount by half, dealers said.
Foreign institutional buying in local equities added downward pressure on the NT dollar before bargain hunting emerged to help the local currency recoup some of its early losses, dealers said.
Foreign institutional investors on Friday sold a net total of NT$925 million (US$30.55 million) of shares on the main board, sending the TAIEX down 0.24 percent by the close, Taiwan Stock Exchange data showed.
The NT Taiwan dollar is expected to gain some support next week, when local exporters are likely to buy into the currency to meet month-end demand for funds, dealers said.
The euro fell on Friday, marking its biggest weekly loss of the year a day after the ECB decided to prolong its bond purchases and signaled its willingness to stick with an ultra-loose policy stance.
The tension between Madrid and Catalonia’s secessionists also stoked selling in the single currency after the Catalan parliament on Friday declared independence from Madrid following a secret ballot.
Spanish Prime Minister Mariano Rajoy retaliated by dismissing the Catalan government and set elections on Dec. 21.
“The dovish surprise from the ECB was its openness to extend the duration of its bond purchase program,” Commonwealth Foreign Exchange chief market strategist Omer Esiner said in Washington.
On Thursday, the ECB said it would extend its bond purchases while reducing its monthly purchases by half to 30 billion euros starting in January.
The move raised bets the ECB was unlikely to raise interest rates until 2019, as the US Federal Reserve has remained on its path to hike US rates further.
The Fed is to hold a two-day policy meeting on Tuesday and Wednesday, when policymakers are expected to leave rates unchanged.
The euro was down 0.5 percent at US$1.1595, bringing its weekly loss against the US dollar to 1.6 percent, the biggest in 11 months.
Against the yen, the common currency was 0.6 percent lower at ￥131.98 after touching its weakest level in nearly two weeks.
The Catalan parliament vote revived some safe-haven demand for the yen and Swiss franc.
Even in the aftermath of Friday’s political turmoil, “the situation in Spain seemed largely contained for now,” Eisner said.
As the euro wobbled this week, the US dollar strengthened on upbeat economic data, hopes for a tax cut and speculation about US President Donald Trump’s selection of someone who favors a faster pace of rate increases than Fed Chair Janet Yellen, whose term expires in February next year.
The US government on Friday reported that the US economy grew at a 3 percent annual rate in the third quarter, faster than the 2.5 percent forecast among economists polled by Reuters.
Earlier on Friday, Bloomberg reported that Trump is leaning toward nominating Fed Governor Jerome Powell as the next Fed chief, but has not made up his mind.
The dollar US pared gains briefly on that report, as Powell is seen as less hawkish than Stanford University economist John Taylor, another potential nominee to lead the central bank.
Trump, who is expected to announce his Fed chief candidate next week, is also considering Yellen, former Fed governor Kevin Warsh and his economic adviser, Gary Cohn, for the Fed’s top job.
The index that tracks the US dollar against six currencies was up 0.3 percent at 94.919 after hitting a three-month high at 95.150. It gained 1.3 percent for its biggest weekly increase so far this year.
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