Taipei--The U.S. dollar fell against the Taiwan dollar Thursday, shedding NT$0.183 to close at NT$30.657 after the U.S. Federal Reserve said it will raise its key interest rates at a modest pace for the rest of this year.
Gains posted by other regional currencies, coupled with strong foreign institutional buying in local equities, added downward pressure on the U.S. dollar throughout the session, dragging the unit down for the second consecutive session, dealers said.
The greenback opened at NT$30.600 and moved between NT$30.564 and NT$30.715 before the close. Turnover totaled US$1.043 billion during the trading session.
Soon after the local foreign exchange market opened, the U.S. dollar faced strong selling after the Fed reaffirmed a gradual interest rate hike cycle this year in a two-day policymaking meeting that wrapped up overnight, the dealers said.
The Fed hinted at the meeting that it will raise its key interest rates three times this year, a tone that is unchanged from an earlier statement. Prior to the latest meeting, the market had anticipated that the Fed would raise interest rates four times in 2017.
The mild pace adopted by the Fed to tighten its monetary policy made foreign investors relieved, so that they pumped large amounts of funds into the region, lifting regional currencies such as the South Korea won, which rose more than 1 percent against the U.S. dollar, giving a strong hint to traders here to buy into the Taiwan dollar, the dealers said.
In addition, foreign institutional investors rushed aggressively to buy into local equities, dealing another blow to the U.S. dollar. According to the Taiwan Stock Exchange, foreign institutional investors bought a net NT$12.58 billion (US$410 million)-worth of shares on the main board, sending the weighted index up 1.0 percent by the close of trade Thursday.
Source: Focus Taiwan News Channel