The U.S. dollar fell against the Taiwan dollar Friday, the last trading session of 2016, shedding NT$0.033 to close at NT$32.279 as local exporters rushed to cut their holdings in the U.S. unit in exchange for the local currency to meet year-end fund demand, dealers said.
A strong showing in the local equity market on the back of foreign institutional buying added to the pressure on the U.S. dollar, which dropped after 11 sessions of appreciation against the Taiwan currency, dealers said.
But the U.S. dollar losses were capped after the local central bank intervened in a bid to prevent the Taiwan dollar from appreciating too fast, dealers said.
The greenback opened at NT$32.260, and moved between NT$32.150 and NT$33.280 before the close. Turnover totaled US$1.123 billion during the trading session.
Soon after the local foreign exchange opened, the U.S. dollar fell slightly in a mild technical correction from the previous session and selling picked up as Taiwanese exporters disposed of the U.S. unit in exchange for the Taiwan dollar to meet year-end demand for funds, dealers said.
The U.S. dollar's downtrend accelerated as currency traders took cues from a strong showing on the local equity market, which was boosted by a Cabinet decision to halve the transaction tax on day trading, dealers said.
The tax break encouraged buying among foreign institutional investors on the equity market, which also helped boost the Taiwan dollar, dealers said.
According to the Taiwan Stock Exchange, foreign institutional investors bought a net NT$6.92 billion (US$214 million) worth of shares on the main board, sending the weighted index up 1.10 percent by the close on Friday.
The massive foreign institutional equity buying and strong demand for the Taiwan dollar among local exporters sent turnover in the local foreign exchange market soaring above US$1.1 billion during the session, dealers said.
For the whole of 2016, the U.S. dollar fell NT$0.787, or 2.44 percent, against the Taiwan dollar, which remained relatively stronger than other regional currencies.
However, the U.S. dollar is expected to gain against the Taiwan dollar as the U.S. Federal Reserve tightens its monetary policy amid a stronger U.S. economy and as foreign investors continue to move funds out of the region, dealers said.
Source: Focus Taiwan News Channel