The foreign-exchange market grabbed the spotlight on the final day of what has been the best month for global equities in four years.
The yen rallied after the Bank of Japan (BOJ) refrained from expanding a record stimulus program, China’s yuan advanced on further steps to increase convertibility and the US dollar erased its monthly gain against major peers.
The Standard & Poor’s 500 Index slipped as it pared its rally for last month to 8.3 percent, while the STOXX Europe 600 Index trimmed its best monthly advance since July 2009.
Central banks have dominated markets this month, with a weak US jobs report jolting equities out of a summer swoon and sinking the dollar on speculation the US Federal Reserve would keep interest rates pinned near zero into next year. Persistent signs of weak global growth prompted the European Central Bank to hint at potential extra stimulus, while China unexpectedly cut its lending rate.
The dollar declined after US inflation and consumer spending figures trailed estimates, dampening the outlook for the economy. The Bloomberg Dollar Spot Index weakened 0.4 percent at 4pm in New York, leaving it 0.3 percent lower for the month. The euro climbed 0.2 percent to US$1.0993.
Japan’s currency strengthened versus the dollar after Friday’s decision to continue expanding the monetary base by ¥80 trillion (US$663.3 billion) a year. The yen added 0.6 percent to ¥120.54 per US dollar. It has lost about 10 percent of its value versus the greenback since the BOJ increased stimulus a year ago, with most of that occurring before the end of last year.
The yuan climbed 0.6 percent in onshore trading and 0.3 percent offshore. The People’s Bank of China said it would consider a trial program in the Shanghai free trade zone allowing domestic individual investors to directly buy overseas assets.
TAIWAN INTERVENTION
In Taiwan, the central bank stepped up end-of-day intervention this week as a surge in stock inflows that have buoyed the local currency threaten to undercut export competitiveness.
The New Taiwan dollar fell an average of 0.9 percent against the greenback in the last hour of trading this week amid routine central bank intervention, compared with 0.5 percent over the previous five days. It lost 1 percent in the last hour on Friday to close 0.2 percent stronger from Thursday at NT$32.802. That pared its weekly drop to 0.9 percent.
Taiwan’s economy shrank for the first time in six years last quarter, a report showed on Friday, and has been hurt by an eight-month run of falling exports. While the contraction in growth supports the case to weaken the currency to aid shipments, the central bank’s task has been made harder by a rebound in the stock market that has lured US$2.1 billion of inflows this month.
The NT dollar’s 2.9 percent drop this year trails a decline of 4.4 percent in the currency of South Korea, Taiwan’s main rival in international markets.
“Exports have been poor because the NT dollar has been stronger than other currencies, undermining competitiveness,” said Cary Ku, an economist at Jih Sun Securities Co (日盛證券) in Taipei.
STRONG POUND
Sterling headed for its biggest monthly gain versus the euro in almost five years. The pound has outperformed most peers this year as investors bet that an improving unemployment rate and a predicted full-year growth rate of 2.5 percent will prompt the Bank of England’s first rate increase since 2007. That pushed a trade-weighted measure of the currency to a seven-year high in August. It has risen 1.8 percent since the end of September, its biggest monthly advance since June.
The pound appreciated 1 percent this week to £0.7124 per euro as of 5pm in London on Friday. Sterling strengthened 3.6 percent against the shared currency this month, which would be the most since November 2010. The pound climbed 0.9 percent to US$1.5458, headed for its first monthly gain versus the dollar since June.
Zhang Yazhou was sitting in the passenger seat of her Tesla Model 3 when she said she heard her father’s panicked voice: The brakes do not work. Approaching a red light, her father swerved around two cars before plowing into a sport utility vehicle and a sedan, and crashing into a large concrete barrier. Stunned, Zhang gazed at the deflating airbag in front of her. She could never have imagined what was to come: Tesla Inc sued her for defamation for complaining publicly about the vehicles brakes — and won. A Chinese court ordered Zhang to pay more than US$23,000 in
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday held its first board of directors meeting in the US, at which it did not unveil any new US investments despite mounting tariff threats from US President Donald Trump. Trump has threatened to impose 100 percent tariffs on Taiwan-made chips, prompting market speculation that TSMC might consider boosting its chip capacity in the US or ramping up production of advanced chips such as those using a 2-nanometer technology process at its Arizona fabs ahead of schedule. Speculation also swirled that the chipmaker might consider building its own advanced packaging capacity in the US as part
‘NO DISRUPTION’: A US trade association said that it was ready to work with the US administration to streamline the program’s requirements and achieve shared goals The White House is seeking to renegotiate US CHIPS and Science Act awards and has signaled delays to some upcoming semiconductor disbursements, two sources familiar with the matter told reporters. The people, along with a third source, said that the new US administration is reviewing the projects awarded under the 2022 law, meant to boost US domestic semiconductor output with US$39 billion in subsidies. Washington plans to renegotiate some of the deals after assessing and changing current requirements, the sources said. The extent of the possible changes and how they would affect agreements already finalized was not immediately clear. It was not known
A move by US President Donald Trump to slap a 25 percent tariff on all steel imports is expected to place Taiwan-made steel, which already has a 25 percent tariff, on an equal footing, the Taiwan Steel & Iron Industries Association said yesterday. Speaking with CNA, association chairman Hwang Chien-chih (黃建智) said such an equal footing is expected to boost Taiwan’s competitive edge against other countries in the US market, describing the tariffs as "positive" for Taiwanese steel exporters. On Monday, Trump signed two executive orders imposing the new metal tariffs on imported steel and aluminum with no exceptions and exemptions, effective