Taipei-The U.S. dollar rose against the Taiwan dollar Monday, gaining NT$0.049 to close at NT$29.150 as traders reacted to fund outflows by foreign investors during the session, dealers said.
The outflows reflected a technical rebound by the U.S. dollar index, which tracks the currencies of Washington's six major trading partners, and drove the U.S. currency higher, but its gains were limited by foreign institutional buying in local stocks, they said.
The greenback opened at NT$29.120, and moved between NT$29.076 and NT$29.155 before the close. Turnover totaled US$779 million during the trading session.
Soon after the foreign exchange market opened, the U.S. dollar attracted buying as foreign investors decided to pocket the recent exchange rate gains made on the Taiwan dollar's appreciation and remit funds out of the country, according to dealers.
Last week, the U.S. dollar lost NT$0.329, or 1.12 percent, against the Taiwan dollar, driven lower in particular by U.S. Treasury Secretary Steven Mnuchin's comment at the World Economic Forum (WEF) in Davos, Switzerland that a weaker dollar was good for the U.S.
The upturn enjoyed by the U.S. dollar on Monday was capped to some extent by gains made on Taiwan's stock market with the help of foreign institutional buying, dealers said.
According to the Taiwan Stock Exchange, foreign institutional investors bought a net NT$2.07 billion (US$71.01 million) in shares, sending the weighted index up 0.67 percent at the close Monday.
In addition, some Taiwanese exporters jumped into the market to sell U.S. dollars in exchange for the Taiwan dollar to satisfy seasonal fund demand, which also let some air out of the greenback, dealers said.
With the Lunar New Year holiday approaching, growing numbers of exporters are expected to buy Taiwan dollars to meet fund demand, so Monday's technical rebound by the U.S. dollar could be short-lived, dealers said.
The Lunar New Year holiday will starts on Feb. 15.
Source: Focus Taiwan News Channel