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.
Japanese Prime Minister Sanae Takaichi has talked up the benefits of a weaker yen in a campaign speech, adopting a tone at odds with her finance ministry, which has refused to rule out any options to counter excessive foreign exchange volatility. Takaichi later softened her stance, saying she did not have a preference for the yen’s direction. “People say the weak yen is bad right now, but for export industries, it’s a major opportunity,” Takaichi said on Saturday at a rally for Liberal Democratic Party candidate Daishiro Yamagiwa in Kanagawa Prefecture ahead of a snap election on Sunday. “Whether it’s selling food or
CONCERNS: Tech companies investing in AI businesses that purchase their products have raised questions among investors that they are artificially propping up demand Nvidia Corp chief executive officer Jensen Huang (黃仁勳) on Saturday said that the company would be participating in OpenAI’s latest funding round, describing it as potentially “the largest investment we’ve ever made.” “We will invest a great deal of money,” Huang told reporters while visiting Taipei. “I believe in OpenAI. The work that they do is incredible. They’re one of the most consequential companies of our time.” Huang did not say exactly how much Nvidia might contribute, but described the investment as “huge.” “Let Sam announce how much he’s going to raise — it’s for him to decide,” Huang said, referring to OpenAI
CHIP HANG-UP: Surging memorychip prices would deal a blow to smartphone sales this year, potentially hindering one of MediaTek’s biggest sources of revenue MediaTek Inc (聯發科), the world’s biggest smartphone chip designer, yesterday said its new artificial intelligence (AI) chips used in data centers are to account for 20 percent of its total revenue next year, as cloud service providers race to deploy AI infrastructure to meet voracious demand. MediaTek is believed to be developing tensor processing units for Google, which are used in AI applications. While it did not confirm such reports, MediaTek said its new application-specific IC (ASIC) business would be a new growth engine for the company. It again hiked its forecast for the addressable ASIC market to US$70 billion by 2028, compared
Motorists ride past a mural along a street in Varanasi, India, yesterday.
RSS