TAIPEI–The U.S. dollar fell against the New Taiwan dollar Thursday, shedding NT$0.046 to close at NT$31.786 after Washington reported disappointing retail sales data for December, dealers said.
A move by the People’s Bank of China (PBOC) to raise the Chinese yuan’s reference rate added downward pressure on the U.S. dollar in the local market, though foreign institutional selling in the local market prevented the U.S. currency from falling further, they said. The greenback opened at NT$31.845 and moved between NT$31.710 and NT$31.850 before the close. Turnover totaled US$710 million during the trading session.
The U.S. dollar opened higher on a mild rebound from a decline seen a session earlier, but it soon fell to negative territory as traders here seized the U.S. retail sales data as an excuse to cut their U.S. currency holdings, dealers said.
The U.S. Department of Commerce reported overnight that retail sales for December fell 0.9 percent, the steepest decline since last January, after increasing 0.4 percent in November.
The December data was worse than an earlier market estimate of an only 0.1 percent drop, raising concerns over the pace of the U.S. economic recovery and prompting currency traders to move funds to non-U.S. dollar assets, dealers said.
Uncertainty over the U.S. economy also made traders wonder what the U.S. Federal Reserve will do about its monetary policy, which could affect the greenback’s future movement, they said.
Selling in the U.S. dollar in the local market was also sparked by a move by the PBOC to raise the yuan’s reference rate against the U.S. unit by about 0.02 percent, which led traders to suspect the Chinese central bank would allow its yuan to move higher, dealers said.
However, the gains posted by the New Taiwan dollar were compromised by foreign institutional selling in the local market, they said. According to the Taiwan Stock Exchange, foreign institutional investors sold a net NT$3.58 billion (US$113 million) worth of local shares.