The US dollar on Friday rose as Republican negotiators in the US Congress put the finishing touches on a sweeping tax overhaul, raising expectations that the bill would be passed by the end of this year.
US Representative Kevin Brady, chairman of the tax-writing House Ways and Means Committee, told reporters that Republicans on the House-Senate negotiating committee working on the revamped bill had signed the finished product.
It comes after two Republicans sought changes to the proposed legislation.
“People will be eying up the US tax plan. There are expectations building they could have it done by next week, if not that pushes if off until next year,” said Mark McCormick, North American head of foreign exchange strategy at TD Securities in Toronto.
The tax bill needs a simple majority to pass in the US Senate, in which Republicans hold just 52 of the 100 seats, and no Democrats are expected to support it.
In Taipei, the New Taiwan dollar rose against the US dollar on Friday, gaining NT$0.014 to close at NT$29.992.
For the week, the NT dollar is up 0.08 percent against the greenback from last week’s NT$30.015.
The Bloomberg US Dollar Spot Index was flat on Friday. It is down 0.4 percent this week.
The yen rose 0.2 percent to ￥112.21 per US dollar, capping its strongest week in a month, rising 1.13 percent.
The euro was little changed at US$1.1785 on Friday, falling slightly from last week’s US1.1774.
The pound was steady at US$1.3442 on Friday, gaining 0.4 percent from last week’s US$1.3390.
The Indian rupee gained 0.4 percent versus the US dollar to 64.122.
The New Zealand dollar jumped 0.6 percent to 70.24 per US dollar, the highest since October.
Many investors expect that the tax overhaul will boost US growth, leading to more interest rate hikes and a higher US dollar.
Tax legislation is seen as the last major event this year as investors wind down trading activity before the Christmas and New Year holidays.
“Markets are really consolidating at this point into holiday trading,” McCormick said.
Meanwhile, the cost for banks to borrow short-term US dollar funds from other banks surged to its highest level since 2012 as financial institutions scrambled to secure funding before thinning trading volumes.
The cross-currency basis swap “is moving in the US direction as people seek funding to cover them through the end of the year,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York.
Additional reporting by Bloomberg, staff writer and CNA
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