US dollar index dips below 99, lifting Asian currencies; New Taiwan Dollar closes at 31.925

The New Taiwan Dollar (NTD) appreciated against the US dollar, closing at 31.925 and extending its gains for a second consecutive day. This strengthening was primarily fueled by a weakening US dollar index, which dipped below the 99 mark following the US Treasury's decision to increase its buybacks of long-term government bonds.

The move by the US Treasury led to a decline in US Treasury yields, providing a tailwind for Asian currencies. The NTD experienced significant intraday fluctuations, reaching a high of 31.84 earlier in the day before testing the 32.00 psychological level in the afternoon. Ultimately, intervention by the central bank helped the currency settle at 31.925.

Market analysts suggest that the sustained weakness of the US dollar remains the key driver for Asian currency appreciation. However, the NTD's ability to break free from the 32.00 range will depend on the return of foreign capital and whether these funds flow further into the equity market and subsequently into the currency market.

While the US dollar index faces technical pressure below 99, potential for technical rebounds and safe-haven demand exists. The US Treasury's bond buyback expansion may temporarily suppress long-term yields, but it does not fundamentally address the US's structural issues of large fiscal deficits, debt, and inflation. Therefore, the sustainability of the dollar's weakness will be closely watched, dependent on upcoming US economic data and the Federal Reserve's interest rate policies.