The U.S. dollar rose against the Taiwan dollar Monday, gaining NT$0.129 to close at NT$31.801 as renewed fears over a rate hike by the U.S. Federal Reserve pushed down the local currency to a one-week low, dealers said.
The weakness of other regional currencies and selling by foreign institutional investors in the local equity market gave an additional boost to the U.S. dollar, lifting it to the highest level since Aug. 22, when it closed at NT$31.820, dealers said.
The greenback opened at NT$31.860, and moved between NT$31.780 and NT$31.878 before the close. Turnover totaled US$912 million during the trading session.
Soon after the local foreign exchange market opened, the U.S. dollar extended its momentum from the previous session and continued to gain as traders cut their Taiwan dollar holdings on cues from a recent speech by U.S. Fed Chairwoman Janet Yellen.
Speaking at the annual central bankers' meeting in Wyoming on Friday, Yellen said the U.S. economy has been improving and she thinks "the case for an increase in the federal funds rate has strengthened in recent months."
Yellen's comments prompted many currency traders in the region to cut their holdings in the regional currencies, dealers said.
The South Korean won, which the Taiwan dollar tracks closely, also suffered selling, giving a strong hint to traders here to dump the local currency, dealers said.
On the local main board, foreign institutional investors shifted to the sell side, recording a net sell of NT$1.33 billion (US$41.82 million) worth of shares, which helped send the weighted index down 0.24 percent at the close Monday and put more pressure on the Taiwan dollar, dealers said.
After the U.S. dollar breached the US$31.80 mark, however, some Taiwanese exporters jumped onto the trading floor, taking advantage of the greenback gains by exchanging their U.S. currency holdings for the Taiwan dollar, dealers said.
The move by the local exporters helped the Taiwan dollar recoup some of its early loses and partly resist the impact of the concerns over a possible rate hike by the Fed, dealers said.
Source: Focus Taiwan