The Japanese yen fell against the US dollar on Friday, after the Bank of Japan bucked a wave of tightening and stuck with its ultra-accommodative stance, adding to soaring volatility in a currency markets hit by a series of rate hikes this week.
Currency markets have been roiled by one of the biggest runs of monetary policy tightening in decades, including the US Federal Reserve’s mid-week 0.75 percent rate increase, its biggest since 1995, and the Swiss National Bank’s surprise decision to hike rates by 0.5 percent.
The Bank of Japan (BOJ) went against the current on Friday, keeping all of its policy settings unchanged and vowing to defend its bond yield cap of 0.25 percent with unlimited buying.
The BOJ’s move knocked the yen, which on Wednesday hit a 24-year low of ￥135.6 per US dollar, broadly lower. It closed down 2.11 percent against the greenback at ￥134.96.
“Today we’re seeing a rebalancing of the market. It’s been a very volatile week,” said Simon Harvey, head of FX analysis at Monex Europe. “Markets are still adjusting to the central bank meetings from throughout the week.”
The US dollar rose off a one-week low against major peers, following a two-day slide after the Fed’s mid-week rate increase of 0.75 percent, a move that was anticipated by markets as the Fed attempts to tame stubbornly high inflation.
The US dollar index, which measures the currency against a basket of six rivals, was up 0.98 percent at 104.65, posting a weekly increase of 0.48 percent.
US Treasury yields held at lower levels on Friday after a volatile week that saw yields hit more than 10-year highs on expectations of aggressive rate hikes, and then fall on concerns about how they would affect growth.
The New Taiwan dollar rose against the greenback on Friday, gaining NT$0.015 to close at NT$29.720, but losing 0.46 percent over the week.
The Swiss National Bank’s (SNB) surprise decision to raise rates by 0.5 percent continued to reverberate through markets.
The euro closed down 0.5 percent at US$1.0497 versus the US dollar.
The franc rocketed to a two-month high on Thursday after the rate hike and boosted by a sense among investors that the SNB would not try and stop a strengthening franc as it has in the past.
Giving up earlier gains on Friday, the US dollar lost 0.39 percent to 0.9702 francs, after tumbling the most in seven years overnight.
“The surprise rate hike in Switzerland, as well as the European Central Bank’s announcement that it is working on a tool to prevent the fragmentation of the European bond markets, will help to limit USD strength around current levels,” strategists at UBS’ Global Wealth Management’s Chief Investment Office said in a research note.
Sterling dropped 1.03 percent to US$1.2223, giving back nearly all of its overnight gains from when the Bank of England decided to lift rates again, albeit by less than many in the market had expected, along with a hawkish signal about future policy action.
Additional reporting by CNA, with staff writer
soft landing: The US’ rate-setting FOMC finds itself in a difficult situation as it seeks to address inflation through interest rate hikes while avoiding a recession The US Federal Reserve is widely expected to hold interest rates steady on Wednesday after a summer of mixed economic data, while leaving the door open to another hike if needed. The Fed has raised interest rates 11 times over the past 18 months, lifting its key lending rate to a level not seen for 22 years as it tackles inflation still stubbornly above its long-term target of 2 percent. Analysts and traders broadly expect the US central bank to hold rates steady on Wednesday in order to give policymakers more time to assess the health of the world’s largest economy. “We think
AI TREND: TSMC has been rapidly expanding capacity to meet a spike in demand for advanced packaging services, but still expects supplies to be tight for 18 months Arizona is in talks with Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) about advanced chip packaging, state Governor Katie Hobbs said yesterday, which is crucial for the manufacturing of artificial intelligence (AI) chips. TSMC, which is building a US$40 billion chip factory in the US state, has not announced plans to build facilities for advanced chip packaging in the US. Advanced packaging processes stitch multiple chips together into a single device, lowering the added cost of more powerful computing. “Part of our efforts at building the semiconductor ecosystem is focusing on advanced packaging, so we have several things in the works around that
NXP Semiconductors NV expects its first automotive-grade 5-nanometer chip built by Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to become available for automakers within one-and-a-half years at the earliest, following demand for better computing performance and energy efficiency for connected vehicles, a company executive said yesterday. That would mean a significant upgrade from the 16-nanometer technology NXP adopted in its existing series of microprocessors. NXP chief technology executive Lars Reger made the remarks during a media briefing yesterday in Taipei. The latest updates came after NXP unveiled its plan to source 5-nanometer capacity from TSMC in 2021. This is Reger’s first trip to
Tailwinds: Blockbuster earnings at Nvidia Corp have sparked hopes of a tech sector boom; Taiwanese chipmakers are hopeful benefits will come to them too The worst could be over for the New Taiwan dollar as China’s economic recovery and a rebound in the chip industry will support the beleaguered currency, analysts said. The NT dollar is on course to weaken for a sixth month, the longest stretch since 2006, after foreign funds turned sour on its technology sector and risk sentiment deteriorated on slower growth in China. The tide seems to be turning now on nascent signs of stabilization in China’s economy — its biggest trading partner — following policy boosts. The yuan emerged as the best-performing Asian currency last week, followed by the Japanese yen