Morgan Stanley raised its forecast for the US dollar against the euro on expectations the US currency will benefit from further interest-rate increases by the Federal Reserve.
The world's biggest securities firm predicts the US dollar will advance to US$1.17 per euro by the end of September, up from an earlier prediction of US$1.20. Morgan Stanley also lifted its forecast for the US dollar against the yen to 108 by Sept. 30 from a previous projection of 101.
The US currency had its best first half against the euro since 1999 as the Fed's nine interest-rate increases since June last year increase the advantage in yield US assets such as government bonds have over equivalent German debt.
"Yield differentials will likely continue to support the dollar for the remainder of the year," Stephen Jen, head of currency strategy in London at Morgan Stanley, wrote in a report, a copy of which was e-mailed to Bloomberg News.
Morgan Stanley expects the US dollar to trade at 112 yen by the end of the year, stronger than its earlier forecast of 101. The US currency will end December at US$1.18 Morgan projects, compared with an earlier forecast of US$1.19.
JPMorgan Chase & Co, the third-biggest US bank, also raised its forecast for the US dollar against the euro, predicting the currency will strengthen to US$1.15 per euro by the end of the year, up from a previous forecast of US$1.20.
"There is much more emphasis on relative economic performance and interest rates," said Claudio Piron, a currency strategist in Singapore at JPMorgan. "Higher US rates will add traction to the dollar."
JPMorgan also raised its forecast for the US dollar versus the yen, predicting the currency will advance to 115 yen by Dec. 31, up from an earlier forecast of 107.
Credit Suisse First Boston, a unit of Switzerland's second-biggest bank, and BNP Paribas SA, France's second-biggest bank, yesterday raised their forecast for the US dollar against the yen on expectations higher oil prices will hamper Japanese economic growth.
NO RECIPROCITY: Taipei has called for cross-strait group travel to resume fully, but Beijing is only allowing people from its Fujian Province to travel to Matsu, the MAC said The Mainland Affairs Council (MAC) yesterday criticized an announcement by the Chinese Ministry of Culture and Tourism that it would lift a travel ban to Taiwan only for residents of China’s Fujian Province, saying that the policy does not meet the principles of reciprocity and openness. Chinese Deputy Minister of Culture and Tourism Rao Quan (饒權) yesterday morning told a delegation of Chinese Nationalist Party (KMT) lawmakers in a meeting in Beijing that the ministry would first allow Fujian residents to visit Lienchiang County (Matsu), adding that they would be able to travel to Taiwan proper directly once express ferry
STUMPED: KMT and TPP lawmakers approved a resolution to suspend the rate hike, which the government said was unavoidable in view of rising global energy costs The Ministry of Economic Affairs yesterday said it has a mandate to raise electricity prices as planned after the legislature passed a non-binding resolution along partisan lines to freeze rates. Chinese Nationalist Party (KMT) lawmakers proposed the resolution to suspend the price hike, which passed by a 59-50 vote. The Taiwan People’s Party (TPP) voted with the KMT. Legislative Speaker Han Kuo-yu (韓國瑜) of the KMT said the resolution is a mandate for the “immediate suspension of electricity price hikes” and for the Executive Yuan to review its energy policy and propose supplementary measures. A government-organized electricity price evaluation board in March
FAST RELEASE: The council lauded the developer for completing model testing in only four days and releasing a commercial version for use by academia and industry The National Science and Technology Council (NSTC) yesterday released the latest artificial intelligence (AI) language model in traditional Chinese embedded with Taiwanese cultural values. The council launched the Trustworthy AI Dialogue Engine (TAIDE) program in April last year to develop and train traditional Chinese-language models based on LLaMA, the open-source AI language model released by Meta. The program aims to tackle the information bias that is often present in international large-scale language models and take Taiwanese culture and values into consideration, it said. Llama 3-TAIDE-LX-8B-Chat-Alpha1, released yesterday, is the latest large language model in traditional Chinese. It was trained based on Meta’s Llama-3-8B
NOVEL METHODS: The PLA has adopted new approaches and recently conducted three combat readiness drills at night which included aircraft and ships, an official said Taiwan is monitoring China’s People’s Liberation Army (PLA) exercises for changes in their size or pattern as the nation prepares for president-elect William Lai’s (賴清德) inauguration on May 20, National Security Bureau (NSB) Director-General Tsai Ming-yen (蔡明彥) said yesterday. Tsai made the comment at a meeting of the Legislative Yuan’s Foreign Affairs and National Defense Committee, in response to Democratic Progressive Party (DPP) Legislator Wang Ting-yu’s (王定宇) questions. China continues to employ a carrot-and-stick approach, in which it applies pressure with “gray zone” tactics, while attempting to entice Taiwanese with perks, Tsai said. These actions aim to help Beijing look like it has