U.S. dollar closes higher on Taipei forex (update)

Taipei--The U.S. dollar rose against the Taiwan dollar Tuesday, gaining NT$0.029 to close at NT$30.256 as foreign investors moved funds out of the country, helping the U.S. currency to recoup earlier losses, dealers said.

The weakness of other regional currencies added downward pressure on the Taiwan dollar, while foreign institutional buying in local equities capped the downturn suffered by the local unit, the dealers said.

The greenback opened at NT$30.230 and moved between NT$30.135 and NT$30.260 before the close. Turnover totaled US$603 million during the trading session.

Soon after the local foreign exchange market opened, the U.S. dollar staged a mild rebound but soon fell into negative territory against the Taiwan dollar, since the U.S. dollar index, which tracks the currencies of Washington's six major trading partners, remained low, the dealers said.

The momentum of the U.S. dollar, however, started to pick up in the afternoon session as foreign investors began to remit funds back to their home markets after receiving cash dividends from their investments in the local equity market, the dealers added.

The strength of the U.S. dollar against the Taiwan dollar also became more visible because of selling in other regional currencies, including the South Korean won, which the local unit follows closely, the dealers said.

However, foreign institutional buying in local equities let some air out of the U.S. dollar, keeping the Taiwan dollar from falling further, they said.

According to the Taiwan Stock Exchange, foreign institutional investors bought a net NT$194 million (US$6.41 million)-worth of shares on the main board, sending the weighted index up 0.10 percent at the end of Tuesday's session.

Despite the gains posted by the U.S. dollar, the greenback remained in consolidation mode, the dealers said, adding that a narrow range of fluctuations is expected for the short term at a time when many currency traders remain on the sidelines to await more clues about how the U.S. Federal Reserve will adjust its monetary policy.

Source: Focus Taiwan News Channel