U.S. dollar closes higher on Taipei forex (update)

Taipei, March 23 (CNA) The U.S. dollar rose against the Taiwan dollar, gaining NT$0.100 to close at the day’s high of NT$32.625 amid caution ahead of a quarterly policymaking meeting scheduled by the local central bank for Thursday, dealers said.

The central bank continued to intervene in the local foreign exchange market, helping the U.S. dollar recoup its earlier losses to close in positive territory in a bid to protect Taiwanese exporters, they said.

The greenback opened at NT$32.480, and moved to a low of NT$32.380 before rebounding. Turnover totaled US$701 million during the trading session.

The U.S. dollar opened lower against the Taiwan dollar on follow-through selling and then kept moving in a narrow range amid cautious sentiment before the central bank’s policymaking meeting, dealers said.

As the local economic growth pace remains wobbly, many traders have anticipated that the central bank will cut interest rates Thursday for the third consecutive quarter. In late December, the central bank lowered interest rates by 0.125 percentage points with the discount rate at 1.625 percent.

In mid-February, the Directorate General of Budget, Accounting and Statistics (DGBAS) revised downward its forecast of Taiwan’s gross domestic product (GDP) growth for 2016 to 1.47 percent from an earlier estimate of a 2.32 percent increase, citing the weakness in country’s export sector as a cause.

In February, Taiwan reported an 11.8 percent year-on-year decline in exports, marking the 13th consecutive month the country’s outbound sales have registered a decrease.

A strong showing made by the Taiwan dollar before the central bank’s intervention Wednesday reflected further foreign fund inflows as foreign traders were betting that the U.S. Federal Reserve would slow down its pace of hiking interest rates, dealers said.

The gains posted by the Taiwan dollar in recent sessions also resulted from massive foreign fund inflows, while the central bank has never stopped its buying in the U.S. dollar to slow down the appreciation of the local currency, they said.

Due to cautious sentiment toward the central bank’s monetary policy, turnover in the local foreign exchange market remained moderate despite the bank’s intervention as many traders preferred to stay on the sidelines, dealers said.

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