U.S. dollar closes higher on Taipei forex

The U.S. dollar rose against the Taiwan dollar Friday, gaining NT$0.002 to close at NT$31.672 after moving in consolidation mode amid cautious sentiment ahead of a speech by U.S. Federal Reserve Chairwoman Janet Yellen later in the day, dealers said.

While the weakness of other regional currencies put pressure on the Taiwan dollar, its losses were limited as foreign institutional investors stayed on the buy side in the local equity market, dealers said.

The greenback opened at NT$31.650, and moved between NT$31.625 and NT$31.699 before the close. Turnover totaled US$541 million during the trading session.

Soon after the local foreign exchange market opened, the U.S. dollar faced some selling but soon regained its footing and fluctuated in a narrow range throughout the rest of session as many traders were waiting on Yellen's speech, dealers said.

Other regional currencies, including the South Korean won which the Taiwan dollar tracks closely, moved slightly lower, giving a hint to currency traders here to cut their holdings in the local currency, dealers said.

On the local main board, foreign institutional investors bought a net NT$3.5 billion (US$111 million) worth of shares, sending the weighted index up 0.18 percent by the close Friday, which prevented the Taiwan dollar from falling further, dealers said. On Thursday, foreign institutional net buying hit NT$7.95 billion.

Since the hawkish comments by several Fed officials on the U.S. central bank's monetary policy, currency traders at home and abroad have been wary about a possible rate hike in the U.S., dealers said.

Kansas City Fed President Esther George, for example, told the press that she will vote for a rate hike at a Fed policymaking meeting in September.

Dealers said George's comments, in particular, have made many traders nervous and amplified the importance of Yellen's upcoming speech at the global central bankers' meeting in Jackson Hole, Wyoming.

In addition, the better than expected durable goods orders in the U.S. in July, which indicated an economic improvement, created more jitters among currency traders who are worried that Yellen will also take a hawkish stance on interest rates, dealers said.

Source: Focus Taiwan