NT$ closes lower on importers' demand for greenback

Taipei, Feb. 25, 2003 (CENS)--The New Taiwan dollar yesterday edged down NT$0.027 to close at NT$34.778 against the U.S. dollar due mainly to strong demand for U.S. dollars by local oil importers, dealers said.

The N.T. dollar opened at the session's high of NT$34.751 against the greenback and hit a low of NT$34.786 during the session.

Total turnover at the Taipei Foreign Exchange amounted to US$277 million, down from the previous session's US$319.5 million.

Dealers said that aggressive bids for U.S. dollars by local oil importers served as the major driver pushing the local currency lower in the morning session. Importers were concerned that oil prices would surge further if the U.S.-led war against Iraq breaks out.

The greenback hit an intraday high of NT$34.786 in mid-afternoon trade, but then gave up part of its gains as exporters and banks locked in profits, dealers said.

Dealers expected the N.T. dollar move between NT$34.76 and NT$34.79 against the U.S. dollar today.

In related financial news, the average interest rate for local overnight interbank loans yesterday moved down 4.7 basis points from the previous session to 1.346% due to the Central Bank of China releasing over NT$40 billion in funds into the banking system.

As the average interest rate for overnight interbank loans rose sharply last Friday due to the increasingly tight short-term credit situation, the central bank yesterday re-purchased NT$45.95 billion in eight-day negotiable certificates of deposits (NCDs) from banks to ease the tight credit situation.

As a result, the average interest rate for overnight interbank loans rose significantly yesterday. The rates for such loans ranged from a low of 1.250% to 1.450% per annum, the rates for seven-day loans ranged from 1.300% to 1.450% and those for three-week loans ranged from 1.400% to 1.450%.