Taipei-The U.S. dollar fell to its lowest point against the Taiwan dollar in more than a year Monday as foreign funds entered the region after the United States and China reached an initial phase of a trade deal over the weekend, dealers said.
The U.S. dollar fell 0.75 percent, or NT$0.230, against the Taiwan dollar to close at NT$30.620, the lowest level since Oct. 1, 2018, when the U.S. currency ended at NT$30.556 against its Taiwanese counterpart.
The greenback opened at NT$30.825, and moved between NT$30.571 and NT$30.830 before the close. Turnover totaled US$1.426 billion during the trading session.
Soon after the foreign exchange market opened, the U.S. dollar faced downward pressure against the Taiwan dollar as traders reacted to the latest developments in the trade talks between the U.S. and China, dealers said.
Selling of the U.S. dollar escalated the rest of the session to push down the currency to a more than one-year low, dealers said.
After the two-day high-level negotiations between Washington and Beijing, the two sides reached an initial consensus under which tariffs on US$250 billion worth of Chinese imports imposed by the U.S., which had previously been set to rise from 25 percent to 30 percent on Oct. 15, will not go into effect.
In addition, Beijing agreed to purchase US$40 billion to US$50 billion worth of agricultural products from American farmers.
Dealers said the deal has reduced tensions in global trade and improved sentiment over the world's economy, prompting investors to buy into non-U.S. dollar denominated assets and dump the greenback in the region.
Buying in the Taiwan dollar was also sparked by the gains posted by the Chinese yuan, which rose about 1 percent against the U.S. dollar at one point Monday because of the initial Washington-Beijing trade deal, dealers said.
The Taiwan dollar also followed the gains posted by the South Korean won, which like the Chinese yuan soared more than 1 percent against the U.S. dollar during Monday's session on fund inflows, dealers added.
A strong showing led by massive foreign institutional buying on Taiwan's stock market was another factor boosting the Taiwan dollar and dragging down the U.S. dollar throughout the forex market session, dealers said.
On Monday, the benchmark weighted index on the Taiwan Stock Exchange (TWSE) ended up 176.99 points, or 1.63 percent, at 11,066.95, as worries over global trade eased.
According to the TWSE, foreign institutional investors bought a net NT$15.18 billion in shares in Taiwan on Monday after a net sell of NT$7.20 billion in shares a session earlier, when the Taiex ended down 1.16 percent.
Source: Focus Taiwan News Channel