Nov 09, 2018 General Comments Off on U.S. dollar closes higher on Taipei forex market on fund outflows
Taipei, With foreign investors moving their funds out of the country, the U.S. dollar rose against the Taiwan dollar Friday, gaining NT$0.110 to close at NT$30.812, dealers said.
The fund exodus reflected fears that the U.S. Federal Reserve turned hawkish on monetary policy after a two-day policymaking meeting concluded overnight, they said.
The weakness of the Taiwan dollar against the U.S. dollar also reflected a sell-off on the local equity market Friday, when foreign institutional investors stood on the sell side, they added.
For the week, the U.S. dollar rose NT$0.074 or 0.24 percent to its highest since Nov. 1, when the greenback closed at NT$30.926.
On Friday, the unit opened at NT$30.750, and moved between NT$30.735 and NT$30.813 before the close of trading. Turnover totaled US$767 million during the session.
The U.S. dollar staged a rebound soon after the local foreign exchange market opened but the gains were moderate in the morning session, dealers said.
However, selling of the Taiwan dollar escalated in the afternoon with local traders motivated by the losses incurred by other regional currencies to sell the local currency amid fears the Fed will accelerate its rate hike cycle, dealers added.
In particular, the South Korea won, which the Taiwan dollar follows closely, fell 1.03 percent against the U.S. dollar, prompting traders to dump the local currency, as foreign investors moved more funds out of the region amid concerns over the Fed's rate hike.
On Thursday, the Fed left its key interest rates unchanged but said the U.S. economy remained on track to recovery. "The labor market has continued to strengthen and ... economic activity has been rising at a strong rate," the Fed said in a statement, presenting a more hawkish view on monetary policy, dealers said.
The Fed is expected to raise interest rates at the next policymaking policy in December.
In addition, foreign institutional investors cut their holdings in local equities which also increased the downward pressure on the Taiwan dollar and boosted the U.S. dollar further, dealers said.
According to the Taiwan Stock Exchange, foreign institutional investors sold a net NT$6.84 billion (US$222 million) worth of shares on the main board, sending the weighted index down 1.16 percent, at 9,830.01 on Friday.
Source: Focus Taiwan News Channel