US Dollar closes well above NT$31 on Fed expectations
Taipei, Sep 16 (CNA) The U.S. dollar continued its momentum against the Taiwanese dollar on Friday, hitting a more than three-year high against the local currency, on expectations that the U.S. Federal Reserve will continue to aggressively raise interest rate.
The US dollar closed up NT$0.163 at NT$31.293, its highest level since September 4, 2019, when the greenback closed at NT$31.365 against the Taiwanese dollar.
The greenback drew strong buying shortly after the local forex market opened as investors rushed to snap up the currency, betting the Fed will act aggressively at a policy meeting scheduled for 20 and Sept. 21, the dealers said.
Weakness in other regional currencies, including the Japanese yen, which fell to a new 24-year low, and the Chinese yuan, which rose above the psychologically important level of 7 to the dollar, added pressure to the decline on the Taiwan dollar, dealers said. .
Investors scrambled to move their funds out of Asia into US dollar-denominated assets to take advantage of their higher interest rates, causing global currencies to depreciate against the greenback.
Expectations that the Fed would raise interest rates further next week were fueled after a stronger-than-expected August inflation report released on Tuesday and a stronger-than-expected August retail sales report released Thursday, the dealers said.
For the week, the US dollar rose NT$0.398 or 1.3% against the Taiwanese dollar, the eighth consecutive week of appreciation against the local currency.
Taiwan’s central bank appeared reluctant to intervene in the foreign exchange market to support the Taiwan dollar as it was unlikely to be able to reverse the trend amid an outflow of funds, dealers said.
Some analysts believed that the US Dollar trading above the NT$31 level would become a new normal and the greenback may soon challenge the NT$31.50 level.
Larry Wei (魏燦文), chairman of the Taiwan Machinery Industry Association, said the US dollar should climb further above NT$32 to help Taiwanese machinery exporters stay competitive against Japanese competitors. , which benefited from the weakening of the yen.
Compared with a more than 11.6% drop in the Taiwan dollar against the US dollar so far this year, the yen has fallen around 25.8% and the weak yen has hurt the competitiveness of suppliers of Taiwanese machinery, according to the association.
September 16: Taiwan stocks end lower after US losses amid rising rates
September 10: Foreign institutional investors record net outflows of funds in August
September 9: Central bank governor expects Taiwan’s CPI growth to fall below 2% in 2023
September 6: Foreign exchange reserves continue to fall after central bank intervention in the market
Aug 31: Average daily turnover on TWSE plunges, but fundamentals are sound: FSC
August 20: the Taiwanese dollar could remain weak; a healthy economy should cap the fall
August 19: The US dollar hits its highest level in two years against the Taiwanese dollar