Asian currencies rose this week, led by India’s rupee, on speculation the US Federal Reserve will delay reducing stimulus amid a US political impasse.
The Bloomberg-JPMorgan Asia Dollar Index gained 0.5 percent in the five days through Friday as the US government started a partial shutdown. Democrats, including US President Barack Obama, say Republicans must end the standoff and raise the debt ceiling as a precondition to talks on broader budget disputes. The Fed will meet on Oct. 30 and 31 after a surprise decision on Sept. 18 to maintain it US$85 billion a month of bond purchases.
“Asian currencies are riding on the tailcoats of a weaker [US] dollar,” said Vishnu Varathan, an economist at Mizuho Bank in Singapore. “Increasingly, the chances of an October taper are almost extinguished, but that will take the backseat the moment we get too close to a debt-ceiling crisis.”
India’s rupee climbed 1.7 percent this week to 61.44 per US dollar in Mumbai, according to data compiled by Bloomberg. The rupee touched 61.2637 on Friday, the strongest level since Aug. 13, after better-than-forecast current-account data boosted optimism that the annual gap would narrow from a record.
The New Taiwan dollar also advanced 0.5 percent this week to NT$29.502. The NT dollar touched NT$29.29 on Friday, the strongest level since Jan. 28, as Chinese data signaled an economic recovery in Taiwan’s biggest export market.
Foreign institutional buying in the local bourse also prompted traders to dump their US dollar holdings throughout the session on Friday, but the greenback’s retreat was cushioned by the central bank’s intervention, dealers said.
Meanwhile, the Malaysian ringgit appreciated 1.4 percent to 3.1827 and the Philippine peso gained 0.7 percent to 43.05.
The peso completed a weekly gain after strengthening the most in two weeks on Thursday, as the Philippines won a debt-rating upgrade from Moody’s Investors Service. That completed the nation’s ascent to investment rank after Standard & Poor’s and Fitch Ratings boosted their assessments in May and March.
Elsewhere in Asia, South Korea’s won advanced 0.3 percent this week to 1,070.43 per US dollar and Indonesia’s rupiah gained 0.1 percent to 11,523. Thailand’s baht rose 0.1 percent to 31.303 and Vietnam’s dong was little changed at 21,115. Chinese financial markets were closed from Tuesday for public holidays.
DOLLAR/YEN
The US dollar fell for a fifth week, the longest stretch since April 2011, as the US congress failed to agree on a way to raise the US$16.7 trillion US debt limit, spurring investors to seek other assets.
The Bloomberg US Dollar Index traded at almost the lowest level since February as a congressional stalemate led to a partial government shutdown. The euro reached its strongest level against the greenback in eight months as Italy’s government won a confidence vote.
The Bloomberg US Dollar Index, which tracks the greenback against 10 major currencies, declined 0.3 percent this week, the most in two weeks, to 1,009.98 in New York.
The US dollar fell 0.8 percent to ￥97.48, the third weekly drop. It touched ￥96.93, the lowest since Aug. 28. The US currency weakened 0.3 percent to US$1.3558 per euro. The yen strengthened 0.5 percent to ￥132.14 per euro.
Sterling fell the most this week among the US dollar’s 16 most-traded peers, after reaching a nine-month high, amid speculation the UK economic recovery is not strong enough to warrant an early interest-rate increase.
The pound slid 0.8 percent to US$1.6010 after rising to US$1.6260 on Tuesday, the highest level since Jan. 2.
TARIFF TRADE-OFF: Machinery exports to China dropped after Beijing ended its tariff reductions in June, while potential new tariffs fueled ‘front-loaded’ orders to the US The nation’s machinery exports to the US amounted to US$7.19 billion last year, surpassing the US$6.86 billion to China to become the largest export destination for the local machinery industry, the Taiwan Association of Machinery Industry (TAMI, 台灣機械公會) said in a report on Jan. 10. It came as some manufacturers brought forward or “front-loaded” US-bound shipments as required by customers ahead of potential tariffs imposed by the new US administration, the association said. During his campaign, US president-elect Donald Trump threatened tariffs of as high as 60 percent on Chinese goods and 10 percent to 20 percent on imports from other countries.
Taiwanese manufacturers have a chance to play a key role in the humanoid robot supply chain, Tongtai Machine and Tool Co (東台精機) chairman Yen Jui-hsiung (嚴瑞雄) said yesterday. That is because Taiwanese companies are capable of making key parts needed for humanoid robots to move, such as harmonic drives and planetary gearboxes, Yen said. This ability to produce these key elements could help Taiwanese manufacturers “become part of the US supply chain,” he added. Yen made the remarks a day after Nvidia Corp cofounder and chief executive officer Jensen Huang (黃仁勳) said his company and Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) are jointly
United Microelectronics Corp (UMC, 聯電) expects its addressable market to grow by a low single-digit percentage this year, lower than the overall foundry industry’s 15 percent expansion and the global semiconductor industry’s 10 percent growth, the contract chipmaker said yesterday after reporting the worst profit in four-and-a-half years in the fourth quarter of last year. Growth would be fueled by demand for artificial intelligence (AI) servers, a moderate recovery in consumer electronics and an increase in semiconductor content, UMC said. “UMC’s goal is to outgrow our addressable market while maintaining our structural profitability,” UMC copresident Jason Wang (王石) told an online earnings
MARKET SHIFTS: Exports to the US soared more than 120 percent to almost one quarter, while ASEAN has steadily increased to 18.5 percent on rising tech sales The proportion of Taiwan’s exports directed to China, including Hong Kong, declined by more than 12 percentage points last year compared with its peak in 2020, the Ministry of Finance said on Thursday last week. The decrease reflects the ongoing restructuring of global supply chains, driven by escalating trade tensions between Beijing and Washington. Data compiled by the ministry showed China and Hong Kong accounted for 31.7 percent of Taiwan’s total outbound sales last year, a drop of 12.2 percentage points from a high of 43.9 percent in 2020. In addition to increasing trade conflicts between China and the US, the ministry said
RSS