Taiwan dollar hits three-week low

The Taiwan dollar weakened on Friday to a three-week low, after lawmakers passed a bill allowing local insurers to invest more of their assets overseas and the Japanese yen fell. The Taiwan dollar ended at T$33.142, compared with the T$33.085 close in the previous day, notching up its fifth consecutive day of decline.
The currency had earlier in the session dipped to T$33.150, it's lowest since May 28. Volume on the main Taipei Forex Inc exchange was heavy at US $1.016 billion, up from US $734 million the previous session.
"There was already selling on the non-deliverable forwards (NDF) market yesterday afternoon ahead of the parliament vote, but today there were strong foreign inflows and central bank intervention, which offered support," said a Taipei dealer.
Taiwan's parliament on Thursday approved a bill to increase the amount of money insurers can invest overseas aimed at helping them boost returns as the island's interest rates remain low. Insurers will be able to invest up to 45 percent of their assets overseas, up from 35 percent now.
A strong outflow of capital from Taiwan in recent months pressured the Taiwan dollar through last month, pushing it to a one-and-a-half year low before the central bank intervened to prop up the currency. Adding to the weak sentiment, the yen hit a 4-1/2 year low versus the US dollar on Friday after the Bank of Japan left interest rates on hold and gave limited guidance on future tightening.
By late in Asian trade, the US dollar was up at 123.33 yen, its highest since December 2002. The Taiwan dollar usually takes its lead from the yen as Japan is the island's largest source of imports.
But further losses by the Taiwan dollar were capped by strong gains in local stocks and foreign capital inflows, said dealers. The main TAIEX index rose 1.45 percent on Friday to a fresh 7-year closing high led by gains in financial shares after passage of the insurance bill.
Foreign net buying of Taiwan shares hit T$22.950 billion ($693 million). The Taiwan dollar also fell on the smaller Cosmos exchange, to T$33.147 from T$33.088 in the previous session.