TAIPEI: :The U.S. dollar tumbled against the Taiwan dollar Friday, shedding NT$0.078 to close at NT$31.432, as overseas shareholders moved funds into the local stock market and lifted demand for the local currency, dealers said.
Foreign fund inflows intensified Friday after the European Central Bank (ECB) announced overnight that it would launch a massive bond-buying program starting in March, they said.
But Taiwan’s central bank intervened late in the session to prop up the U.S. dollar, helping the local currency recoup most of its earlier losses and keep it from appreciating too much, which would hurt the country’s exports, they added.
The greenback opened at NT$31.512 and moved between NT$31.290 and NT$31.519 before the close. Turnover totaled US$1.129 billion during the trading session.
The U.S. dollar opened higher on a technical rebound from a day earlier, but soon dipped into negative territory as traders shifted to the sell side in response to the ECB’s stimulus program, dealers said.
After wrapping up a policymaking meeting Thursday, the ECB said it will buy 60 billion euros (US$68.19 billion) a month in bonds starting in March, a move similar to the U.S. Federal Reserve’s quantitative easing (QE) program that concluded last year.
Dealers said that because the QE plan announced by the ECB was more aggressive than market expectations of 50 billion euros a month, foreign investors rushed to move large funds into regional markets, including Taiwan.
Amid ample liquidity, foreign institutional investors bought a net NT$21.27 billion (US$677 million) in local shares on the main board to send the weighted index up 1.08 percent at 9,470.94 at the close.
Due to fund inflows and a strong showing in Taiwan’s equity market, the U.S. dollar faced heavy downward pressure to fall below the NT$31.30 mark at one point, which prompted the central bank to step in to vault the greenback back to the NT$31.50 level at the end of the session, dealers said.
The U.S. dollar is expected to encounter more selling if foreign investors, encouraged by the ECB’s massive stimulus measures, continue to remit funds into Taiwan, they said.
Dealers also expected the local central bank to lend more support to the U.S. unit to slow down the pace of the Taiwan dollar’s appreciation.
