Taipei--The U.S. dollar rose against the Taiwan dollar Wednesday, gaining NT$0.017 to close at NT$30.218 amid rising political tensions between North Korea and the United States, dealers said.
A plunge in the local stock market, also caused by geopolitical concerns, gave an additional boost to the U.S. dollar on the back of heavy foreign institutional selling in Taiwanese equities throughout the session, the dealers said.
The greenback opened at NT$30.200 and moved between NT$30.196 and NT$30.249 before the close. Turnover totaled US$615 million during the trading session.
Soon after the local foreign exchange market opened, the U.S. dollar fell against the Taiwan dollar on follow-through selling from a session earlier, but then regained its footing as traders here were motivated by North Korea's missile threats to the U.S. to move their assets to greenback-denominated assets as a safe haven, the dealers said.
Pyongyang said that it is "carefully examining" plans to launch a missile strike on U.S. Pacific territory Guam, while U.S. President Donald Trump responded that North Korea's threats will be met with "fire and fury."
In the wake of the rising tensions, currency traders in the region rushed to cut their holdings in regional currencies, in particular the South Korean won, lifting the U.S. dollar further, the dealers said.
The won, which the Taiwan dollar follows closely, fell more than 1 percent against the U.S. dollar at one point, prompting traders here to dispose of the local currency amid fears that geopolitical tensions will get worse, the dealers added.
The weakness of the local equity market as a result of foreign institutional selling dealt another blow to the Taiwan dollar, giving more support for the U.S. dollar, the dealers said.
According to the Taiwan Stock Exchange, foreign institutional investors sold a net NT$6.95 billion (US$230 million) on the main board, sending the weighted index down 0.93 percent at Wednesday's close.
The dealers said that some foreign institutional investors even moved some of the funds they obtained from equity sales out of the local market, paving the way for an even weaker Taiwan dollar.
Source: Focus Taiwan News Channel