The Taiwan dollar weakened a tad on Wednesday on selling in the non-deliverable forwards market, although suspected heavy central bank intervention softened the fall. The Taiwan dollar closed at T$33.192 against Tuesday's close of T$33.183 to the US dollar.
Volume on the main Taipei Forex Inc exchange was heavy at US $1.058 billion compared with US $715 million the previous session. "The central bank was very active in defending the Taiwan dollar at around the T$33.200 level," said a Taipei dealer.
The central bank is regularly active in the market to curb excessive movements, which has been exacerbated in recent sessions by insurance firms, who have been sending large amounts of capital abroad to fund investments.
The yen offered little incentive, roughly level at 118.52 against the US dollar with the same time late in Asia trade on Tuesday. "Even though the US dollar was broadly weaker, it was hardly moved against the yen, so many domestic buyers sought to cash in on currency's comparative strength and buy more," said another dealer.
The euro hit a two-year high against the dollar on Wednesday, extending gains after weak US housing and consumer confidence data the previous session bolstered expectations the Federal Reserve will cut rates this year.
The euro, which is supported by expectations the European Central Bank will raise rates in June, rose to $1.3645 on the electronic trading platform EBS, up from $1.3639 in late US trading on Tuesday. The Taiwan dollar also fell on the smaller Cosmos exchange to T$33.199 from T$33.191.