CBC intervenes to dampen appreciation of NT dollar.
Taipei, Oct. 12, 2012 (CENS) -- In response to the interest cut by Koran central bank to bolster export, the Central Bank of China (CBC) intervened in the forex market at the end of the trading session yesterday (Oct. 11), inducing the NT dollar to forego major appreciation in midsession and close slightly lower against the greenback, so as to sustain Taiwan's export competitiveness.
The exchange rate of renminbi hit a new high yesterday, fueling appreciation of Asian currencies. The Korean central bank cut interest rate yesterday to dampen appreciation of Korean won and bolster export. To offset the advantage of Korean exporters, the CBC stepped into the market to buy U.S. dollars at the end of the trading session, prompting the NT dollar to close at US$1=NT$29.432, for devaluation of NT$0.033, compared with gains of over NT$0.1 in midsession.
One-month quote for NDF (non-delivery forward) of the NT dollar remained unchanged yesterday, underscoring lack of definite direction for operation by overseas institutional investors. It is estimated that in the short term, the NT dollar will fluctuate between US$1=NT$29.2-29.5 and the CBC will hold to the line of US$1=NT$29.
In simultaneous consideration of price hike and export competitiveness, the CBC stepped up its control of the forex market recently. It sticks to the principle of keeping the appreciation of the NT dollar lower than that of Korean won. Since the end of June, the NT dollar had appreciated 1.59% against the greenback as of yesterday, compared with 2.79% appreciation of Korean won. Since October, the NT dollar had devalued 0.31%, compared with 0.26% depreciation of Korean won.
Trading volume at the forex market reached US$993 million yesterday, half of which came from sales of forex by exporters.
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|Title Annotation:||Central Bank of China|
|Publication:||The Taiwan Economic News|
|Article Type:||Brief article|
|Date:||Oct 12, 2012|
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