U.S. Dollar Closes Lower on Taipei Forex

Taipei, July 1 (CNA) The U.S. dollar fell against the Taiwan dollar Monday, shedding NT$0.005 to close at NT$30.115 as traders took cues from the strength of the Chinese yuan and the South Korean won to raise their holdings in the local currency, dealers said.

The willingness to hold regional currencies was boosted by the latest manufacturing activity data in China, which was within market expectations, they said.

The losses suffered by the greenback, however, were recouped to some extent after the local central bank stepped in, as it has done in recent sessions, to prop up the currency and slow the pace of the Taiwan dollar's appreciation, they added.

The U.S. dollar opened at NT$30.179, and moved between NT$29.952 and NT$30.185 before the close. Turnover totaled US$498 million during the trading session.

The U.S. currency continued to strengthen against the Taiwan dollar from a session earlier soon after the local foreign exchange market opened, but became weaker in the wake of gains posted by several regional units such as the Chinese yuan and the South Korean won, the dealers said.

The higher yuan and won largely reflected the latest purchasing managers' index (PMI) in China, which showed that manufacturing activity there expanded in June, although the PMI fell to 50.1, down 0.7 from a month earlier. A PMI above 50 indicates expanding manufacturing activity.

The June PMI in China came within market expectations, which encouraged traders to buy the yuan, while such buying also spread to the won, which rose 0.5 percent at one point against the U.S. dollar, making the fifth consecutive session in which the currency gained, the dealers said.

The stronger yuan also reflected optimism toward China's financial system after the Chinese authorities told the market that the Chinese banking sector has plenty of reserves to take on a credit crunch that had hit China's financial markets in recent sessions, they said.

After the U.S. dollar fell below the NT$30 mark against the Taiwan dollar, the local central bank entered the trading floor again to push the greenback back to a level preferable to the central bank in a bid to make locally made goods cheaper in the global market, the dealers said.