The US dollar on Friday rose against the New Taiwan dollar, gaining NT$0.225 to close at NT$31.020, as local traders were motivated by further fund outflows from the region to cut their holdings in the local currency, dealers said.
Losses suffered by other regional currencies gave traders an additional hint to sell the NT dollar in exchange for the US dollar throughout the session, amid rising fears that the US Federal Reserve will raise its key interest rates later this month, the dealers said.
Foreign institutional selling in the local stock market pushed the NT dollar even lower, which led the US dollar to close at a new high since Feb. 13, when the greenback ended at NT$31.030 against its Taiwanese counterpart, they said.
The greenback opened at the day’s low of NT$30.830 and moved to the day’s high of NT$31.520 before the close. Turnover totaled US$1.227 billion during the trading session.
Soon after the local foreign exchange market opened, the US dollar extended its momentum from a session earlier to move higher on the back of more fund outflows prompted by concerns over a possible interest rate hike by the Fed, the dealers said.
Fed officials seem to have become hawkish on a move to tighten monetary policy at a time when the US economy has been on the road to recovery, and their comments have made many currency traders wary of the movement of non-US dollar currencies, the dealers said.
Under such circumstances, the South Korean won, which the NT dollar tracks closely, fell more than 1 percent against the US dollar at one point, so that traders rushed to cut their holdings in the local currency, the dealers said.
Foreign institutional selling in local equities also created more losses for the NT dollar, as many large-cap stocks moved lower, the dealers added.
The US dollar slipped against a basket of major currencies on Friday after Fed Chair Janet Yellen said that raising interest rates this month would be appropriate as long as the US economy continues to improve as expected.
Yellen’s remarks followed hawkish comments in recent days from a slew of Fed speakers and cement a likely rate hike at the Fed’s next meeting on March 15.
Analysts said the rate increase had largely been priced in before Yellen’s comments, sending the US dollar lower on Friday afternoon as some investors took profits.
“There’s a lot of positive news now priced into the market, and I think we’ll probably see some profit-taking, so I think we’ll probably see the [US] dollar weaken from here,” Chapdelaine Foreign Exchange managing director Douglas Borthwick said in New York.
Yellen also said rates are likely to rise faster this year, as the economy for the first time in her tenure appears clear of any imminent hurdles at home or abroad.
“Yellen’s comments have caught up with market expectations, in that she’s looking for three rate moves this year,” Borthwick said.
The US dollar index, which measures the greenback against a basket of six major currencies, was down 0.7 percent. It is up about 0.4 percent this week, and on Thursday hit a seven-week high of 102.26.
Futures traders now are pricing in an 86 percent chance of a Fed hike this month, up from 35 percent on Tuesday, according to the CME Group’s FedWatch Tool.
Against the Japanese yen, the greenback was down 0.24 percent to ￥114.02 on Friday.
The euro rebounded from recent weakness, rising 0.93 percent to US$1.06 on Friday, after a poll showed French candidate Marine Le Pen’s chances in the country’s presidential election dimming.
However, the French election has not been the main driver for the euro’s recent weakness, Bank of Nova Scotia chief foreign exchange strategist Shaun Osborne said in Toronto.
“That’s more about the shift in relative yields and monetary stance given the move in short-term rates in the US,” he said.
Two-year US Treasury yields on Thursday hit their highest in more than seven-and-a-half years.
Rate hike expectations also weighed on the New Zealand dollar, which was on pace for its worst week in 11 against the greenback. On Friday, it was down 0.41 percent to NZ$1.42.
Mexico’s peso rallied to a nearly four-month high of 19.52 pesos after new US Secretary of Commerce Wilbur Ross offered support to the battered currency and said Mexico and the US could reach a mutually beneficial trade deal.
END TO SPECULATION: The hotel’s management contract has been extended, despite reports that it wanted to end its alliance with Hyatt Hotels over a deal with Riant Capital Singapore-based Hong Leong Hotel Development Ltd (豐隆大飯店股份) yesterday said it has extended a management contract to ensure the continued presence of the Grand Hyatt brand in Taipei, ending rumors that the two sides were parting ways. “We are pleased Hyatt is able to come to terms on the extension of the management contract of Grand Hyatt Taipei,” said Kwek Leng Beng (郭令明), executive chairman of City Developments Ltd (城市發展) and Millennium & Copthorne Hotels Ltd (千禧國敦酒店). Hong Leong Hotel Development is a subsidiary of Millennium, and both fall under the Hong Leong Group (豐隆集團). The Grand Hyatt Taipei (台北君悅大飯店), owned and built by
’WHITE BOX’: The open platform would give local firms access to Cisco’s cloud-based mobile network to develop 5G telecom equipment and tap into the global market The Ministry of Economic Affairs (MOEA) yesterday introduced a new 5G “open lab” in collaboration with US-based information technology and networking giant Cisco Systems Inc to address the rapidly growing “white box” 5G networking equipment market. The open lab will be a platform where Taiwanese manufacturers can access Cisco’s cloud-based mobile network to develop their own 5G telecom equipment, such as small-cell base stations, network switches, modems and Internet of things (IoT) devices, a ministry statement said. The open platform would allow Taiwanese manufacturers to tap into the lucrative 5G telecom equipment market, which was previously monopolized by Nokia Oyj, Ericsson AB
Nintendo Co is raising its target for Switch production to about 25 million units this fiscal year, people familiar with the matter said, as the ongoing COVID-19 pandemic keeps lifting demand and component shortages ease. The Kyoto, Japan-based company, which in April hiked orders to 22 million units by March next year, is asking partners to tack on another few million units, said the people, who did not want to be identified discussing internal goals. Assembly partners plan to work at maximum capacity through December. The new production target suggests that Nintendo is likely to outperform its Switch sales forecast of 19 million
NERVOUS MARKET: With the infection sources still unknown for three COVID-19 cases that had departed Taiwan, investors have become uneasy, an analyst said Local shares yesterday came under heavy downward pressure, falling more than 1 percent as renewed fears over a possible increase in domestic COVID-19 infections hit market sentiment after the nation last week reported a case related to a Belgian national. Selling focused on the bellwether electronics sector, led by contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which pushed down the broader market as investors ignored gains posted by tech heavyweights on the US market at the end of last week, dealers said. The TAIEX closed down 151.77 points, or 1.2 percent, at 12,513.03, on turnover of NT$231.43 billion (US$7.84 billion). Foreign