US Treasury expands bond buybacks, dollar falls below 99; New Taiwan dollar gains

The US Treasury's announcement of an expanded long-term bond buyback program sent ripples through global currency markets, leading to a significant drop in the dollar index below the 99 mark. This move eased pressure on US Treasury yields, prompting a broad rally in major Asian currencies.

The Japanese yen recovered to the 158 level against the dollar, while the Chinese yuan surged past 6.72, reaching a three-year high. The New Taiwan dollar also joined the trend, appreciating by nearly 1角 (0.1 NTD) in early trading to hover around the 31.8 level against the US dollar. By midday, it settled at 31.925, marking a 1.2 cent gain.

This currency movement follows a period of volatility for the New Taiwan dollar, which experienced sharp fluctuations the previous day, twice dipping below the 32 mark. Intervention by Taiwan's central bank at the end of trading helped it recover and maintain a position above 31.

Market sentiment was influenced by the latest Federal Reserve meeting minutes, which indicated a potential for further interest rate hikes if inflation persisted. However, recent data showing stable inflation and a weakening job market led futures markets to reduce their expectations for rate increases. The Treasury's buyback announcement further suppressed bond yields, contributing to the dollar's decline and the strengthening of Asian currencies.