By Sandra Chuang, The China Post
The NT dollar ended flat against the U.S. dollar yesterday. The exchange rate closed at NT$34.053 to the U.S. dollar on a daily turnover of US$374.5 million.
The market opened higher at NT$34.023 against the greenback but fell due to the comments of the Taiwan Research Institute (TRI) last weekend that there was still room for the local currency to depreciate.
In addition to the comments, the early drop was also prompted by reports on the plummeting of the Japanese yen following disappointing first quarter GDP data released by the Japanese government in the morning, said dealers. The Japanese currency dropped below 121 yen against the U.S. dollar in late morning trading on a report that GDP growth was only 0.9 percent, down 0.2 percent from the previous predication.
“Greenback buying by importers and foreign banks was seen in earlier trading here as these reports somewhat undermined their confidence,” said a dealer at a local bank. The NT dollar was quoted at NT$34.053 to the U.S. dollar at 12:00 p.m. with trading volumes of US$248.5 million.
In the afternoon, the Central Bank of China (CBC) began to intervene in the market in response to the growing expectation of further deprecation. Meanwhile, foreign investors actively bought the local currency to increase their holdings in Taiwan stocks, helping the currency to end flat. Most dealers said the CBC regularly intervenes in the market in the near-term, but added that the current economic downturn would likely moderate in the near future.
The NT dollar traded between NT$34.084 and NT$33.999 yesterday.