The New Taiwan dollar showed signs of stabilizing yesterday after a recent surge, but local shares still closed slightly lower as investors remained concerned over possible US tariffs on semiconductor imports.
The NT dollar reversed its steep rise in the previous two sessions, closing down NT$0.135, or 0.45 percent, at NT$30.280 against the US dollar in Taipei trading.
The NT dollar led volatile moves in Asia earlier this month, surging as much as 5 percent against the US dollar on Monday, its biggest single-day gain since the 1980s.
Photo: CNA
The rally was fueled by exporters rushing to convert US dollar holdings and signs that life insurers might have been hedging their greenback-denominated portfolios.
However, it edged lower yesterday amid a broader pullback in Asian currencies.
Central bank Governor Yang Chin-long (楊金龍) on Monday said that speculative activity had driven the sharp appreciation, prompting the bank to intervene early this month.
Photo: CNA
Yang attributed part of the sharp rise to analyst statements that the NT dollar might rise, calling for them to tamp down their chatter.
President William Lai (賴清德) and the Cabinet’s Office of Trade Negotiations have denied that the currency has been discussed during talks with the US, which has threatened to impose a 32 percent tariff on Taiwanese exports.
While the local currency stabilized after its sharp rally earlier this week, the TAIEX closed down 10.40 points, or 0.05 percent, at 20,522.59 yesterday, as concerns over potential US semiconductor tariffs weighed on sentiment.
After opening down 179.11 points, the market rebounded and reached its intraday high just before noon. However, selling pressure intensified later in the session, particularly in large-cap semiconductor stocks, dragging the TAIEX into negative territory by the close.
“Investors seemed relieved to some extent after the central bank, the largest player in Taiwan’s currency market, said volatility was over,” Mega International Investment Services Corp (兆豐國際投顧) analyst Alex Huang (黃國偉) said.
However, “possible tariffs on semiconductors returned to hurt sentiment. So Taiwan Semiconductor Manufacturing Co [TSMC, 台積電] came under pressure, dragging the broader market lower,” he said.
TSMC, the world’s largest contract chipmaker and also the most heavily weighted stock on the local main board, lost 1.92 percent.
However, easing concerns over the impact of currency fluctuations on insurers’ overseas assets lent support to the financial sector.
Cathay Financial Holding Co (國泰金控) rose 2.19 percent, while E.Sun Financial Holding Co (玉山金控) gained 2.69 percent. In contrast, Fubon Financial Holding Co (富邦金控) slipped 1.25 percent.
With the NT dollar’s unprecedented two-day rally subsiding, investor attention is now turning to the US Federal Reserve’s policy meeting today.
While the Fed is widely expected to keep rates unchanged, the meeting might be the last with such a clear-cut outcome.
DIVIDED VIEWS: Although the Fed agreed on holding rates steady, some officials see no rate cuts for this year, while 10 policymakers foresee two or more cuts There are a lot of unknowns about the outlook for the economy and interest rates, but US Federal Reserve Chair Jerome Powell signaled at least one thing seems certain: Higher prices are coming. Fed policymakers voted unanimously to hold interest rates steady at a range of 4.25 percent to 4.50 percent for a fourth straight meeting on Wednesday, as they await clarity on whether tariffs would leave a one-time or more lasting mark on inflation. Powell said it is still unclear how much of the bill would fall on the shoulders of consumers, but he expects to learn more about tariffs
NOT JUSTIFIED: The bank’s governor said there would only be a rate cut if inflation falls below 1.5% and economic conditions deteriorate, which have not been detected The central bank yesterday kept its key interest rates unchanged for a fifth consecutive quarter, aligning with market expectations, while slightly lowering its inflation outlook amid signs of cooling price pressures. The move came after the US Federal Reserve held rates steady overnight, despite pressure from US President Donald Trump to cut borrowing costs. Central bank board members unanimously voted to maintain the discount rate at 2 percent, the secured loan rate at 2.375 percent and the overnight lending rate at 4.25 percent. “We consider the policy decision appropriate, although it suggests tightening leaning after factoring in slackening inflation and stable GDP growth,”
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