TAIPEI — The U.S. dollar rose against the Taiwan dollar Friday, gaining NT$0.047 to close at NT$30.257 on large foreign institutional selling in the local bourse, dealers said.
The weakness of other currencies in the region on escalating fears that Europe’s debt crisis was spreading also prompted traders in the local foreign exchange market to cut their Taiwan dollar holdings, they said.
The U.S. unit opened at NT$30.270 and moved between NT$30.210 and NT$30.280 before the close. Turnover totaled US$755 million during the trading session.
The greenback picked up momentum soon after the local foreign exchange market opened, reversing a downturn seen in the previous session, as traders witnessed a tumble in the local bourse, dealers said.
After a plunge on Wall Street overnight, foreign institutional investors rushed to sell liquid large cap stocks to meet fund redemption demand back home, a move that imposed downward pressure on the local currency throughout the day, they said.
On a day when foreign investors sold a net NT$11.66 billion (US$385 million) in shares, the Taiwan stock exchange’s benchmark weighted index closed down 2.08 percent to fall below the 7,300 mark.
The sell-off on the local bourse was ignited by a spike in the 10-year government bond yield in Spain amid cautious sentiment ahead of this weekend’s national elections in the country, dealers said.
Other currencies in the region, in particular the South Korean won and the Indonesian rupiah, suffered heavy selling as traders feared that the European debt crisis would hurt the region’s economic growth, putting pressure on the Taiwan dollar, they added.
Despite the weakness of the local currency, trading volume in the local foreign exchange remained moderate as many traders still stayed on the sidelines, waiting to see the outcome of Spain’s election.