The euro hit a new all-time high against the US dollar yesterday, climbing as high as US$1.3878 amid speculation that the US Federal Reserve would soon cut interest rates.
The 13-nation euro broke through its previous record of US$1.3852, reached in July. By early morning in Europe, it had settled back slightly to US$1.3867.
The US dollar, which has hovered within a few cents of its record low over recent weeks, has come under new pressure since the US Labor Department on Friday issued unexpectedly poor jobs data last month.
That report strengthened speculation that the Fed would cut interest rates at its meeting next Tuesday. A cut from the current rate, 5.25 percent, would be the first reduction in four years.
Lower interest rates, used to jump-start the economy, can weaken a currency by giving investors lower returns on investments denominated in it.
Most economists expect the Fed to ease credit policy. The debate has shifted to how much -- a quarter or a half percentage point.
Fed Chairman Ben Bernanke offered no hints on the Fed's intentions during a speech in Berlin on Tuesday. He did not address the future course of interest rates in the US nor the state of the US economy.
On Wall Street, investors also felt more confident about the prospects of a rate cut and pushed stocks up. The Dow Jones industrial average gained 180.54 points to close at 13,308.39 on Tuesday.
In the speech, Bernanke said that the US and other countries must work together to right a skewed pattern of trade and investment around the globe, a move that would help worldwide economic stability.
So-called "global imbalances" occur when countries such as the US run up bloated trade deficits, while other countries, such as China and oil-producing nations, produce big trade surpluses.
As for prospects of fixing the problem, Bernanke said: "Signs of progress have appeared but ... most countries have only just begun to undertake the policy changes that will ultimately be needed."
Widening interest rate differentials mean that currency investors can reap higher returns from the euro rather than the struggling dollar.
"The dollar is under significant pressure ... the main drivers of dollar weakness appear to be collapsing short-term interest rate differentials as markets look to a series of reductions in the Fed funds rate and a related rise in risk appetite," HBOS analyst Steve Pearson said yesterday.
MORE VISITORS: The Tourism Administration said that it is seeing positive prospects in its efforts to expand the tourism market in North America and Europe Taiwan has been ranked as the cheapest place in the world to travel to this year, based on a list recommended by NerdWallet. The San Francisco-based personal finance company said that Taiwan topped the list of 16 nations it chose for budget travelers because US tourists do not need visas and travelers can easily have a good meal for less than US$10. A bus ride in Taipei costs just under US$0.50, while subway rides start at US$0.60, the firm said, adding that public transportation in Taiwan is easy to navigate. The firm also called Taiwan a “food lover’s paradise,” citing inexpensive breakfast stalls
TRADE: A mandatory declaration of origin for manufactured goods bound for the US is to take effect on May 7 to block China from exploiting Taiwan’s trade channels All products manufactured in Taiwan and exported to the US must include a signed declaration of origin starting on May 7, the Bureau of Foreign Trade announced yesterday. US President Donald Trump on April 2 imposed a 32 percent tariff on imports from Taiwan, but one week later announced a 90-day pause on its implementation. However, a universal 10 percent tariff was immediately applied to most imports from around the world. On April 12, the Trump administration further exempted computers, smartphones and semiconductors from the new tariffs. In response, President William Lai’s (賴清德) administration has introduced a series of countermeasures to support affected
CROSS-STRAIT: The vast majority of Taiwanese support maintaining the ‘status quo,’ while concern is rising about Beijing’s influence operations More than eight out of 10 Taiwanese reject Beijing’s “one country, two systems” framework for cross-strait relations, according to a survey released by the Mainland Affairs Council (MAC) on Thursday. The MAC’s latest quarterly survey found that 84.4 percent of respondents opposed Beijing’s “one country, two systems” formula for handling cross-strait relations — a figure consistent with past polling. Over the past three years, opposition to the framework has remained high, ranging from a low of 83.6 percent in April 2023 to a peak of 89.6 percent in April last year. In the most recent poll, 82.5 percent also rejected China’s
PLUGGING HOLES: The amendments would bring the legislation in line with systems found in other countries such as Japan and the US, Legislator Chen Kuan-ting said Democratic Progressive Party (DPP) Legislator Chen Kuan-ting (陳冠廷) has proposed amending national security legislation amid a spate of espionage cases. Potential gaps in security vetting procedures for personnel with access to sensitive information prompted him to propose the amendments, which would introduce changes to Article 14 of the Classified National Security Information Protection Act (國家機密保護法), Chen said yesterday. The proposal, which aims to enhance interagency vetting procedures and reduce the risk of classified information leaks, would establish a comprehensive security clearance system in Taiwan, he said. The amendment would require character and loyalty checks for civil servants and intelligence personnel prior to
RSS