The Taiwan dollar fell on Monday to a six-month closing low as fund outflows continued after the US dollar firmed internationally, but gains in the stock market helped limit the fall. The Taiwan dollar finished at T$31.430 to the US dollar, its lowest close since February 22, down from the previous close of T$31.370.
Volume on the main Taipei Forex Inc exchange was soft at $815 million, slightly lower than $840 million in the previous session. "The central bank has intervened several times at T$31.4, so there will be little room for the local currency to go down further," said a dealer at a local bank.
"That's why dealers stayed sidelined during most of today's session, causing light volume for the day," said the dealer. The US dollar rose broadly on Monday, hitting a two-year high against sterling, with a downtrend in commodity prices intact, leaving investors scurrying to buy back the currency and sparking a rebound in Asian stocks.
There were still some foreign fund outflows, though the amount was light, partly offset by a rise in the local stock market, dealers said. Foreign fund investors bought a net T$6.4 billion ($204 million) on Monday, ending a eight-session selling streak, after Taiwan stocks rebounded 1.72 percent from a three-week closing low, lifted by Wall Street gains.
In the non-deliverable forwards (NDFs) market, six-month NDFs were quoted at -0.180/-0.130, narrower than -0.270/-0.220 on Friday, suggesting that the market expected the Taiwan dollar to strengthen by a smaller degree in six months. The Taiwan dollar was little affected by news the economy grew by an annual 4.32 percent in the second quarter, its weakest since the first quarter of 2007, due to weak private investments and consumption.