There is limited room for the US dollar to rise further, as currency markets have mostly priced in US economic growth and interest rate hikes by the US Federal Reserve, the local branch of Standard Chartered Bank said yesterday.
The Asia-focused British bank expects the global economy to expand 4 percent this year, faster than last year’s 3.8 percent, as evidenced by economic data improvement around the world.
The US dollar might remain strong in the short term, with the Fed poised for two more rate hikes this year, while trade tensions between the US and China gain steam, Standard Chartered Bank Taiwan’s (渣打台灣銀行) wealth management head Cindy Fu (傅敏儀) said.
“For the medium and long run, the US dollar may come under correction pressure, as the markets have priced in the US economic showing and Fed’s moves,” Fu said.
The bank expects the US Dollar Index, a measure of the value of the greenback against six major currencies, might face resistance at the 96 to 98 range, from about 94 now, Fu said.
The EU and the UK would enter monetary tightening cycles, subduing the yield gap of the US currency versus the euro or the British pound, she said.
The euro might find support at 1.15 against the greenback and challenge 1.2 in the second half of the year, following the EU announcement to stop the bond purchase program this year.
Against the global backdrop, Standard Chartered Bank favors equities over bonds, based on the belief that a full-blown trade war is unlikely, though tensions are building, Fu said.
The yuan is likely to range-trade between 6.5 and 6.7 against the US dollar for the rest of this year, if the trade rows stabilize, Fu said.
Otherwise, the Chinese currency could weaken to 6.9 and signs of stabilization could be delayed until after the midterm elections in the US, she said, adding that risk diversification is the best defense against volatility.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
RSS