Taipei, April 16 (CNA) The U.S. dollar rose against the Taiwan dollar Monday, gaining NT$0.123 to close at NT$29.425, a high of almost three months, on the back of fund outflows from the country, according to dealers.
Geopolitical tension following airstrikes by the U.S.-led coalition against Syria and concerns over an acceleration of a rate hike in the U.S. market struck the nerves of many currency traders in the local market, the dealers said.
In addition, a live-fire military exercise planned by China's People's Liberation Army in the Taiwan Strait for Wednesday raised concerns over cross-strait stability, prompting currency traders to dump the Taiwan dollar, the dealers said.
Meanwhile, Chinese President Xi Jinping announced last week that China will further open its market to foreign investors, a move that drove foreign investors to move their funds out of Taiwan in preparation for future investment in China, the dealers said.
The weakness of other regional currencies also placed downward pressure on the Taiwan dollar and further boosted the U.S. dollar to a high since Jan. 22, when the U.S. currency closed at NT$29.432 against the Taiwan dollar, the dealers added.
It was the fourth consecutive session in which the U.S. dollar had moved higher against the Taiwan dollar.
The greenback opened at NT$29.303 and moved between NT$29.290 and NT$29.426 before the close. Turnover totaled US$988 million during the trading session.
Soon after the local foreign exchange market opened, the U.S. dollar got a boost from a rising U.S. dollar index, which tracks the currencies of Washington's six major partners, as currency traders hedged risks by moving their funds to U.S. dollar-denominated assets, the dealers said.
A move by currency traders to exit the Taiwan market came amid political concerns in the Middle East as well as in the Taiwan Strait, which hammered the Taiwan dollar throughout the session, the dealers added.
The latest policymaking meeting minutes of the U.S. Federal Reserve hinted that the central bank might raise its key interest rates at a quicker pace for this year due to a stronger economy and rising inflation, leading foreign investors to remit their funds out of the region, the dealers said.
The losses suffered by other regional currencies, in particular the South Korean won, which fell more than 0.4 percent against the U.S. dollar at one point, also dragged down the Taiwan dollar against the greenback throughout the session, they added.
Moreover, foreign institutional selling in local equities also served as a driver to a lower Taiwan dollar, the dealers said. According to the Taiwan Stock Exchange, foreign institutional investors sold a net NT$2.80 billion (US$95.16 million)-worth of shares on the main board Monday.
Source: Focus Taiwan News Channel