The New Taiwan dollar fell below NT$30 against the US dollar yesterday after the central bank scaled back its market intervention, allowing the local currency to dip and hit a two-year low, dealers said.
The NT dollar dropped NT$0.029 to close at NT$30.020 on turnover of US$868 million.
The greenback opened at the day’s low of NT$30.020 and moved to a high of NT$30.050 before the close.
Foreign institutional investors moved a large amount of funds out of Taiwan throughout yesterday, but Taiwanese exporters partially offset the impact of the fund outflows on the local currency by buying NT dollars with US dollars to get a favorable rate, dealers said.
Also adding downward pressure on the NT dollar was the selling by foreign institution investors of a net NT$7.31 billion in shares on the main stock market, dealers said.
Although the NT dollar faced selling pressure, it was surprising that the central bank chose not to intervene in the market, allowing the local currency to fall below NT$30, they said, adding that with no apparent central bank presence, yesterday’s turnover remained moderate.
As the US Federal Reserve is expected to continue a rate hike cycle to take on inflation, the US dollar is forecast to keep rising, prompting more foreign institutional investors to move funds out of Taiwan, dealers said.
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