Weakening yen, outlook pushes NT dollar down

Sandra Chuang, The China Post

The NT dollar yesterday fell NT$0.024 to close at NT$34.403 against the U.S. dollar while the daily turnover shrank to US$326.5 million from Monday’s US$487.5 million. The market opened at a daily high of NT$34.326 on inflow of foreign funds. However, the earlier gains were soon offset by greenback buying partly due to the declining Japanese yen. “Depreciation pressure was seen on the NT dollar in the morning as many traders were concerned about the weakening yen and an unclear economic outlook,” said a dealer. He added that speculation on the jobless rate, money supply, and other economic data somewhat had effect on the market as the government is scheduled to release the statistics within this week.

The exchange rate was quoted at NT34.392 to the U.S. dollar at 12:00 p.m., down NT$0.013 from the close of the previous session.

In the afternoon, traders opted to retreat to the sideline after the Central Bank of China (CBC) showed its determination to prevent the local currency from falling too much. “The central bank was moderately active in selling greenback as it did on Monday, keeping the currency steadying range-bound around NT$34.4 level,” said a dealer.

Most dealers estimated that the CBC sold around US$150 million in greenbacks throughout the session to keep a rein on the local currency’s value.

The NT dollar was traded between NT$34.43 and NT$34.326 yesterday.