The Taiwan dollar fell on Monday to a 5-1/2 month low, due to a globally stronger US dollar fuelled by declining oil prices, although dealers saw foreign fund inflows after the stock market jumped. The Taiwan dollar closed at T$31.166 to the US dollar, its lowest finish since February 26, down from the previous final price of T$31.090.
Volume on the main Taipei Forex Inc was active at $1.481 billion, compared with $2.512 billion in the previous session, the fifth highest level of all time. The US dollar, the strength of which pressures Taiwan's dollar, struck a six-month high against a basket of currencies on Monday, racking up more gains as worries about the global economy's strength sparked a sell-off in the euro and higher-yielding currencies.
Oil importers were also selling the Taiwan dollar, said a dealer in Taipei. But a rise in the local bourse helped limit the loss. "Foreign funds were buying the local currency ... after the stock market gained," said another dealer in Taipei.
Taiwan stocks closed up 1.62 percent to a two-week closing high as electronics shares were boosted by a weaker Taiwan dollar and falling oil prices. Foreign investors bought a net T$7.7 billion ($248 million) in the stock market on Monday, but they had been big sellers in July, unloading more than T$109 billion.
The central bank also intervened to prevent the Taiwan dollar from falling too much, dealers said. One said the central bank stepped in when the rate hit T$31.2. The central bank usually steps into the market when it wants the Taiwan dollar to trend gradually.