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

The U.S. dollar rose against the Taiwan dollar Thursday, rising NT$0.002 to close at NT$31.892 on its third consecutive day of gains.

Dealers said the movement of the U.S. dollar signaled further strengthening and higher inflation, which in turn may prompt the U.S. Federal Reserve to raise its key interest rates.

Continued foreign institutional buying in local equities, however, helped the Taiwan dollar recover some of its losses by the end of the session, dealers said.

The greenback opened at the day’s high of NT$31.969, and moved to a low of NT$31.860 before rebounding. Turnover totaled US$724 million during the trading session.

Soon after the local foreign exchange market opened, the U.S. dollar began climbing on follow-through buying from the previous session on anticipation of higher inflation in the United States after a significant increase in international crude oil prices overnight, dealers said.

The spike in crude oil prices followed a decision by the Organization of the Petroleum Exporting Countries (OPEC) in Vienna on Wednesday to cut production, which eased worry over a supply glut.

A rise in the 10-year treasury yield in the U.S. also encouraged traders here to buy into the U.S. dollar, betting on an increase in U.S. interest rates down the road, dealers said.

But the U.S. dollar’s upturn was limited by continued foreign institutional buying in the local equity market, dealers said.

According to the Taiwan Stock Exchange, foreign institutional investors bought a net NT$960 million (US$30.10 million) worth of shares on the main board Thursday, sending the weighted index up 0.25 percent at the close.

Despite the gains, dealers said, the U.S. dollar remained in consolidation mode amid cautious sentiment ahead of the release of the non-farm payroll data in Washington on Friday.

Source: Focus Taiwan News Channel

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