Sun, May 12, 2019 - Page 14 News List

NT dollar slides as euro gains on US dollar overseas

Staff writer, with CNA and Reuters

The New Taiwan dollar on Friday slid against the US dollar, shedding NT$0.002 to close at NT$30.958, a decline of 0.2 percent from NT$30.907 a week earlier.

Turnover totaled US$873 million during the trading session.

The greenback opened at the day’s high of NT$30.960 and moved to a low of NT$30.935 before rebounding.

Elsewhere on Friday, the euro firmed and was poised for a second consecutive week of gains on growing fears that any escalation in a trade conflict between the US and China would force US policymakers to cut interest rates.

US President Donald Trump’s tariff increase from 10 percent to 25 percent on US$200 billion of Chinese goods kicked in on Friday, and Beijing said that it would strike back.

The two sides were pursuing last-ditch talks to try to salvage a trade deal.

Investors have quietly ratcheted up bets of a US interest rate cut, with markets now roughly expecting one rate hike by the end of this year.

If China retaliates, then the threat of a global trade war would affect the outlook of the US economy and increase the chances of a rate cut by the US Federal Reserve, BofA Securities foreign exchange strategist Athanasios Vamvakidis said.

“In this case, the Fed has more room to ease than most other central banks, suggesting eventually a weaker [US] dollar against both the euro and the yen,” he said.

The single currency edged 0.2 percent higher to US$1.1239.

Europe is seen as a barometer for global growth and markets would benefit from any trade deal between China and the US, foreign exchange risk management specialist SmartCurrencyBusiness senior currency consultant John Marley said.

Trump on Friday said that he was in “absolutely no rush” to finalize a trade agreement with China as US negotiators prepared to continue talks in Washington, adding that discussions were continuing “in a very congenial manner.”

Broadly, risk appetite was muted, although some of the higher-yielding currencies, such as the Australian dollar, which was heavily sold this week when Trump unexpectedly ramped up trade tensions, gained.

The US dollar index measuring the currency against a basket of six other major currencies, of which the euro is a main component, was broadly steady at 97.38.

Still, trade tensions have had broadly little impact on foreign exchange markets, with typical perceived safe-haven assets such as the Japanese yen only gaining 1.2 percent this week while broader currency market volatility gauges were subdued, despite a minor bounce this week.

Elsewhere, the pound held at about US$1.30 after sustaining some losses this week after first-quarter British GDP data broadly matched expectations with a 0.5 percent expansion.

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