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New Taiwan Dollar surges past 32 against US Dollar on foreign inflows

From Liberty Times · () Chinese

Translated from Chinese, summarized and contextualized by DistantNews.

At a glance

News Named sources Context piece
  • The New Taiwan Dollar strengthened significantly against the US Dollar this week, breaking the 32.0 mark to reach 31.991, driven by cooling US inflation and foreign investor inflows.
  • Foreign investors bought over NT$200 billion in Taiwanese stocks this week, boosting the local currency as expectations for a September US interest rate hike diminished.
  • Analysts predict the New Taiwan Dollar could continue its upward trend, potentially returning to the 31 range if foreign capital continues to flow into the stock market.

The New Taiwan Dollar surged this week, breaking the 32.0 barrier against the US Dollar and reaching a high of 31.991. This appreciation is attributed to a combination of factors, including cooling inflation in the United States, a weaker dollar, and sustained foreign investment in Taiwan's stock market.

The New Taiwan Dollar strengthened 0.38% to follow closely behind, with the Singapore Dollar rising 0.11%, the Japanese Yen 0.1%, and the Chinese Yuan also appreciating slightly by 0.04%.

โ€” Currency tradersContext about the performance of Asian currencies against the US Dollar.

Foreign investors have been actively buying Taiwanese stocks, injecting significant capital into the economy. This week alone, they purchased over NT$200 billion, with daily net inflows. The market's expectation of a reduced likelihood of a September interest rate hike by the US Federal Reserve has further supported the currency's rise.

Currency traders noted that the US July CPI and PPI data showed a slowdown, coupled with recent weakness in the job market. This has led to a significant shift in market sentiment, with the probability of a September rate hike now estimated at around 30%.

The US July CPI and PPI data showed a slowdown, coupled with recent weakness in the job market. This has led to a significant shift in market sentiment, with the probability of a September rate hike now estimated at around 30%.

โ€” Currency tradersExplanation for the shift in market expectations regarding US interest rates.

Looking ahead, the movement of foreign capital remains the key determinant for the New Taiwan Dollar's trajectory. After a substantial depreciation in July, largely due to seasonal dividend outflows, the currency has been steadily recovering in August. If foreign investors maintain their buying momentum and continue to bring capital into Taiwan, the New Taiwan Dollar is expected to remain strong, with a potential return to the 31 range in sight.

The key factor influencing the New Taiwan Dollar's trend remains the direction of foreign capital. The New Taiwan Dollar depreciated by 4.55่ง’ in July, becoming the weakest Asian currency, mainly due to foreign investors selling Taiwanese stocks and large dividend payouts, leading to seasonal capital outflows. Since entering August, the exchange rate has gradually recovered lost ground.

โ€” Currency tradersAnalysis of the New Taiwan Dollar's recent performance and future outlook.
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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