U.S. dollar closes lower on Taipei forex (update)

The U.S. dollar fell against the Taiwan dollar Friday, shedding NT$0.033 to close at NT$31.703 after the United States reported weaker manufacturing activity, hurting the greenback, dealers said.

Foreign institutional investors shifted to the buy side on Taiwan's equity market Friday, putting further pressure on the U.S. dollar in a session that saw only moderate turnover ahead of the release of U.S. job data later in the day, they said.

The greenback opened at NT$31.723, and moved between NT$31.683 and NT$31.733 before the close. Turnover totaled US$655 million during the trading session.

The U.S. dollar faced downward pressure soon after the foreign exchange market opened following the release of the U.S. manufacturing data overnight, dealers said.

The U.S. Institute for Supply Management reported that the ISM manufacturing index for August came in at 49.4, the weakest level since January. A reading above 50 reflects expansion, while a number below 50 shows contraction.

The data led currency traders in the region to question the strength of the U.S. economy and consequently push regional currencies higher, signaling to traders here that they should buy into the Taiwan dollar, dealers said.

On Taiwan's stock exchange, foreign institutional investors bought a net NT$407 million (US$12.84 million) in shares Friday, lending further support to the Taiwan dollar throughout the session, they said.

Despite the upturn posted by the Taiwan dollar, trading in the forex market was relatively slow, with many traders taking to the sidelines, waiting for the release of U.S. non-farm payroll data for August, dealers said.

With the next U.S. Federal Reserve policymaking scheduled for Sept. 20 to 21, the job data is expected to be an important indicator for the Fed in deciding whether to raise its key interest rates, they said.

Source: Focus Taiwan News Channel