Taipei, The U.S. dollar finished at above NT$30 on Wednesday for the first time since December 2017 as investors moved their funds to U.S. dollar-denominated assets amid concerns over political turmoil in Italy, dealers said.
The greenback gained NT$0.062 to close at NT$30.050, its best finish against Taiwan's currency since closing at NT$30.060 on Nov. 22, 2017.
The last time the U.S. dollar ended above the NT$30 mark was on Dec. 18, 2017.
Many export-oriented companies hailed the losses posted by the Taiwan dollar, and the Taiwan Association of Machinery Industry even hoped that the U.S. dollar will rise to NT$32 to further boost Taiwan's global competitiveness.
The U.S. dollar opened at NT$30.010 and moved to a high of NT$30.061 before the close. Turnover totaled US$1.221 billion during the trading session.
Soon after the local foreign exchange market opened, the U.S. dollar breached the NT$30 mark as traders reacted to a weakening euro caused by political tension in Italy, the third largest economy in Europe.
Selling in the euro came after President Sergio Mattarella of Italy blocked the formation of a coalition government on Sunday, which could lead to another election and further roil the eurozone, dealers said.
The weakness of the euro, which fell overnight to its lowest level against the U.S. dollar this year, prompted investors in Asia to hedge their bets by putting their funds into U.S. dollar-denominated assets.
They were worried that if the political situation in Italy gets out of control, it will put further downward pressure on Asian currencies, including the Taiwan dollar, dealers said.
A growing crisis in Spain, where Prime Minister Mariano Rajoy faces a no-confidence vote after his party was found guilty of taking illegal funds, also contributed to selling in regional currencies, dealers said.
The South Korean won, which the Taiwan dollar traces closely, fell almost 0.50 percent against the U.S. dollar at one point, also giving a clear hint to traders here to dump the local currency, dealers said.
The selling in Taiwan was limited, however, by seasonal fund demand from Taiwanese exporters as the current month comes to an end, according to dealers.
They said the uptrend for the U.S. dollar is expected to continue amid expectations that the U.S. Federal Reserve will raise interest rates at its policymaking meeting in mid-June, which would make the greenback more attractive relative to other currencies.
Since the beginning of the current quarter, the U.S. dollar has gained 3.19 percent against the Taiwan dollar, after a 2.44 percent fall in the first quarter.
Source: Focus Taiwan News Channel