Sun, Jun 10, 2018 - Page 14 News List

NT dollar slides against greenback

POLICY FOCUS:An expected interest rate hike by the US Federal Reserve, a European Central Bank meeting and a Brexit bill vote could stir more market volatility

Staff writer, with CNA and Reuters

The New Taiwan dollar on Friday fell against the US dollar, shedding NT$0.076 to close at NT$29.816.

Turnover totaled US$643 million during the trading session.

The greenback opened at NT$29.770, moving between NT$29.752 and NT$29.818 before the close.

That compared with a close of NT$29.864 on June 1, an appreciation of 0.2 percent.

Elsewhere on Friday, the US dollar rose after a four-day losing streak, while the safe-haven yen gained as investors grew cautious over what was expected to be a contentious G7 meeting in Canada.

Despite Friday’s gains, the US dollar posted its largest weekly drop since late March.

Next week’s expected hike in US interest rates by the US Federal Reserve, a European Central Bank policy meeting and a Brexit bill vote all pose risks for currency traders and could inject more volatility in the market.

“America’s isolation on trade policy, which will be on full show at this weekend’s G7 summit in Canada, raises the admittedly still small risks of a worst-case scenario in which the US tears up NAFTA [North American Free Trade Agreement] or launches an all-out trade war with China,” Capital Economics senior US chief economist Michael Pearce said.

The US’ top allies on Friday scrambled to keep the G7 summit from veering off track as US President Donald Trump vowed to deal with “unfair trade practices” by Canada and the EU.

In late trading, the US dollar rose 0.2 percent against a basket of currencies to 93.56.

However, it fell 0.7 percent for the week, its steepest weekly fall in 10 weeks.

Trade disputes between the US and its major partners will be in the spotlight, with specific focus on the Mexican peso and the Canadian dollar.

Meanwhile, high-yielding currencies were a sea of red, with the yen higher on the day. The US dollar was last down 0.2 percent versus the yen at ¥109.45.

The greenback was under pressure this week as the euro bounced back from 10-month lows amid easing Italian political concerns and speculation that the European Central Bank could signal intentions to start unwinding its massive bond purchasing program when it holds its policy meeting on Thursday next week.

The euro fell 0.3 percent to US$1.1766 after rising to a three-week high of US$1.184 overnight as investors took profits into this week’s bounce. It was up 0.9 percent on the week, its biggest weekly gain since mid-February.

While expectations have grown that the European Central Bank will signal its intention to wind down its quantitative easing program, ING Groep NV believes the Italian political situation and the potential of a breakout in trade tensions will keep the central bank from taking action.

Meanwhile, the Fed is widely expected to raise rates next week.

Investors will most likely focus more on clues about interest rate rises for the rest of the year.

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