The Taiwan dollar fell on Monday after hitting its highest in nearly six months, as importers, such as oil firms, and investment trusts bought US dollars, although central bank moves and foreign fund inflows limited the losses. The Taiwan dollar ended weaker at T$32.765 to the US dollar versus Friday's close of T$32.735.
The local currency had opened at T$32.685 and firmed to T$32.625, its strongest level since January 11. "There is a lot of US dollar buying by importers. The central bank was in the main market today, but it wasn't as aggressive as on Friday, when it sold so many US dollars that the Taiwan dollar ended firmer," said a dealer in Taipei.
Volume on the main Taipei Forex Inc exchange was US $796 million, below a hefty US $1.0465 billion on Friday, when last-minute US dollar selling by the central bank bolstered activity.
"Oil firms and investment trusts were still in the market seeking US dollars, which is why the Taiwan dollar weakened today," said another dealer. A lack of bullish news over the weekend and an expected increase in US refinery production caused US crude futures to decline on Monday, as traders took profits from a rally.
Taiwan is totally reliant on imports of crude to meet its oil needs, with refiners required to buy US currency to fund their oil purchases. NYMEX crude for August delivery was trading 14 cents lower at $70.54 a barrel in Globex electronic trading. The market had risen $1.11 on Friday to $70.68, the highest settlement since August 25.
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