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🇹🇼 Taiwan /Economy & Trade

New Taiwan Dollar falls for third day amid Fed's hawkish signals, dollar strength

From Liberty Times · () Chinese

Translated from Chinese, summarized and contextualized by DistantNews.

At a glance

News Named sources Context piece
  • The New Taiwan Dollar weakened for the third consecutive day, closing at 31.631 against the US dollar, influenced by hawkish signals from the US Federal Reserve and a strengthening dollar index.
  • Despite a strong performance in the Taiwan stock market, driven by AI themes and significant foreign investment, the currency faced pressure from the global economic outlook.
  • Analysts predict the New Taiwan Dollar may continue to fluctuate between 31.3 and 31.7, with its resilience dependent on continued AI sector growth and foreign capital inflows.

The New Taiwan Dollar weakened for the third straight day, closing at 31.631 against the US dollar. This decline occurred despite a robust performance in the Taiwan stock market, which reached a new historical high above 47,000 points, fueled by AI sector enthusiasm and substantial foreign investment. Foreign investors bought a record NT$68.458 billion in stocks.

The market's expectation of a Fed rate hike in the second half of the year is supporting the dollar's strong trend.

— Forex market analystExplaining the factors influencing the New Taiwan Dollar's performance against the strengthening US dollar.

The currency's weakness is attributed to hawkish signals from the US Federal Reserve and a renewed rise in the dollar index above 100. Major Asian currencies also faced pressure, with the Japanese Yen hitting new lows. The New Taiwan Dollar depreciated by 4.3 cents, closing at 31.631 with a total turnover of US$2.021 billion.

Taiwan continues to benefit from the AI wave, with strong export and investment momentum, and its economic growth rate is expected to exceed 9% this year.

— Forex market analystHighlighting Taiwan's economic strengths amidst currency fluctuations.

While the stock market surged, the foreign exchange market told a different story. The New Taiwan Dollar opened below 31.6 and touched an intraday low of 31.648. According to central bank data, the dollar index rose 0.63% from June 18 to June 21. The Japanese Yen fell 0.74%, the Korean Won 0.64%, and the Singapore Dollar 0.42%. The Chinese Yuan depreciated by 0.22%. In comparison, the New Taiwan Dollar's 0.14% depreciation showed relative stability.

Exporters holding large dollar positions may enter the market at suitable prices at any time.

— Forex market analystDiscussing potential market interventions by exporters.

Forex market professionals suggest that rising expectations of a US interest rate hike in the second half of the year are supporting the dollar. However, Taiwan's strong economic growth, projected to exceed 9% this year due to robust exports and investment driven by the AI boom, could offer support. Exporters holding significant dollar reserves may enter the market at favorable rates. Continued growth in the AI sector and foreign capital inflows into the stock market could also bolster the New Taiwan Dollar, enabling it to resist further depreciation even if the dollar remains strong. The exchange rate is expected to trade within the 31.3 to 31.7 range in the short term.

If the AI industry continues to heat up and foreign capital continues to flow back into the stock market, the New Taiwan Dollar still has the opportunity to show relative resilience even if the US dollar remains strong.

— Forex market analystForecasting the New Taiwan Dollar's future performance based on AI sector and capital flows.
DistantNews Editorial

Originally published by Liberty Times in Chinese. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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