The New Taiwan dollar yesterday surged more than 2 percent in another day of volatility for the currency, as exporters’ sales of the greenback tested the central bank’s tolerance for local currency strength.
The NT dollar jumped as much as 2.5 percent to NT$29.160 per US dollar yesterday in the biggest one-day gain since early May, after sliding more than 2 percent on Monday.
The latest move pushed the local currency’s gain this year to 12 percent, making it the best performer in Asia.
Photo: An Rong Xu, Bloomberg
Large foreign inflows and significant US dollar selling by local exporters were seen in the morning session, according to two traders, who asked not to be identified as they were not authorized to speak publicly.
State banks bought the greenback to smooth market liquidity, they said.
The local currency has been buffeted by a series of sharp swings since Friday last week, as the central bank stepped in to check its gains following the US dollar’s decline.
Authorities are eager to prevent a sharp appreciation to ease the pressure on life insurers after a jump in exports amid a trade dispute triggered a wave of repatriation by Taiwanese corporations.
“The Taiwan dollar has been under strong appreciation pressure due to record trade surpluses, equity inflows, and hedging activity by Taiwan life insurance companies,” Australia and New Zealand Banking Group Ltd head of Asia research Khoon Goh (吳昆) wrote in a note.
Since the central bank “strategically allowed” the NT dollar to rally in early May, it has been trying to manage the currency’s strength, he said.
Central bank Governor Yang Chin-long (楊金龍) played down the impact of local currency volatility at the last policy meeting on June 19. The monetary authority said it would continue to promote the “orderly operation of the foreign exchange market” — a line that indicated stability was one of its biggest concerns.
The surge in the local currency came as foreign investors snapped up local shares last month and exporters ramped up sales of the greenback amid concerns the US currency would keep falling. Repatriation of funds from Taiwan’s asset managers also played a role.
While the exact reasons behind the latest moves were unclear, the wild swings in the NT dollar over the past two trading sessions come as domestic firms — including life insurers and exporters — prepare to release their half-year financial reports. The sharp slide which helped the currency close lower on Monday would have helped local firms — many of which have taken a hit from the currency’s rally — to present better financial results.
“Window-dressing type of interventions are seasonal in nature and serve to pause, but not reverse the USD/TWD trend,” Malayan Banking Bhd senior strategist Fiona Lim said in Singapore. “As long as the broader US dollar decline continues, the sell-USD/TWD-on-rally trade could go on.”
The currency pair is expected to swing both ways as the NT dollar gets caught between speculation of central bank intervention and weakness in the greenback, she said.
Ryanair, Transavia, Volotea and other low-cost airlines are feeling the financial pain from high jet fuel prices as a result of the Middle East war and are cutting flights. The closure of the Strait of Hormuz has taken a huge chunk of oil supplies off the market, sending the price of jet fuel soaring and triggering fears of shortages that could force airlines to cancel flights. Airlines are not waiting for a lack of supplies to react. “Travel alert: Airlines are cutting thousands of flights right now,” Travel Therapy host Karen Schaler said in an Instagram reel this past weekend.
MANAGING RISKS: Taiwan has secured LNG sufficient to cover 95 percent of electricity demand for next month, UBS said, describing the government’s approach as proactive UBS Group AG has raised its forecast for Taiwan’s economic growth this year to 8 percent, up from 6.9 percent previously, and said expansion could reach as high as 8.6 percent if external energy shocks are avoided. The upgrade reflects a stronger-than-expected first-quarter performance and sustained momentum in artificial intelligence (AI)-driven exports, which UBS said are providing a firm foundation for growth despite geopolitical and energy risks. Taiwan’s GDP expanded 13.69 percent year-on-year in the first quarter, the fastest growth since the second quarter of 1987, the Directorate-General of Budget, Accounting and Statistics (DGBAS) reported on Thursday. On a seasonally
The list of Asian stocks that benefit from business partnership with Nvidia Corp is getting longer, as the region further integrates into the artificial intelligence (AI) chip giant’s business ecosystem. Just in the past week, South Korea’s LG Electronics Inc, Taiwan’s Nanya Technology Corp (南亞科技), as well as China’s Huizhou Desay SV Automotive Co (德賽西威) and Pateo Connect Technology Shanghai Corp (博泰車聯) have become the latest to rally on news of tie-ups, supply-chain participation or product collaboration with the US chip designer. Asian suppliers account for about 90 percent of Nvidia’s production costs, up from about 65 percent last year, data compiled
The Fair Trade Commission’s (FTC) ongoing review of Grab Holdings Ltd’s US$600 million acquisition of Foodpanda Taiwan’s operations, announced on March 23, has taken on fresh urgency as industry experts warn that the transaction could embed significant Chinese cybersecurity vulnerabilities into Taiwan’s digital infrastructure through Grab’s deep ties to autonomous-driving firm WeRide (文遠知行). Less than 16 months after the FTC blocked Uber Eats’ direct attempt to acquire Foodpanda Taiwan — citing potential combined market shares of 80 to 90 percent — the emergence of Grab as the buyer has prompted questions about whether the same competitive harm is simply being rerouted
RSS