
Taipei, May 12 (CNA) The U.S. dollar surged to its highest against the Taiwan dollar in almost two years Thursday, on the back of fears the U.S. Federal Reserve could take a more hawkish approach to tightening in the wake of the latest consumer price index (CPI) report released overnight in Washington, dealers said.
The U.S. dollar rose NT$0.118 to close at NT$29.823 against the Taiwan dollar, the highest level since June 5, 2020, when the greenback closed at NT$29.839.
Dealers said soon after the local forex market opened Thursday, the U.S. currency attracted strong buying as investors took their cue from the U.S. CPI report, with the index rising 8.3 percent in April, beating an earlier market estimate of 8.1 percent, though the April figure was lower than March's 8.5 percent increase.
CPI growth in April was still the highest for almost 40 years, leaving investors expecting the Fed to speed up the speed of its rate hike cycle launched in March, which has caused an exodus of foreign funds from Taiwan.
The Fed raised its key interest rates by 25 basis points in mid-March and an additional 50 basis points in early May.
Dealers said the heavy losses on the local equity market, with net sales of NT$10.32 billion worth of shares on the main board, increased the downward pressure on the Taiwan dollar.
The Taiex, the weighted index on the Taiwan Stock Exchange, ended down almost 400 points or 2.43 percent, at the day's low of 15,616.68 points amid volatility on U.S. markets overnight after the CPI report.
The Taiex tumble was led by the bellwether electronics sector as investors expect rising interest rates to make tech stocks at home and abroad less attractive, dealers said.
Before the local forex market closed, central bank governor Yang Chin-long (楊金龍) said at a Legislative Yuan hearing that he does not rule out the possibility of the bank intervening in the market in a bid to prevent further Taiwan dollar volatility and stabilize the local forex market.
The central bank took to the trading floor in March and April, selling U.S. dollar to shore up the Taiwan dollar, a move which saw the country's forex reserves fall two months in a row.
Yang said despite the flight of some foreign funds, Taiwan remains awash in liquidity to help the local economy steam ahead.
- More than 30% of Taiwan's industrial, service sectors hiked pay in 2021About one third of companies in Taiwan's industrial and service sectors, which are the biggest private-sector employers in Taiwan, raised regular wages in 2021, according to the ...05/28/2022 07:25 PM
- Consumer confidence weakens to 2-year low amid economic worriesLocal consumer confidence weakened to a two-year low in May amid concerns over rising inflation, National Central University (NCU) said Friday.05/27/2022 04:25 PM
- Taipower to roll out new rates for electric car ownersState-run Taiwan Power Co. (Taipower) said Sunday that from June 1, electric car owners will be charged a flat-rate NT$262.50 monthly fee for household electricity, as well as a ...05/22/2022 07:25 PM
- Society
Taiwan COVID-19 News Briefs: May 28
05/28/2022 10:43 PM - Society
Non-profit group tackles menstrual stigma by washing temple entrance
05/28/2022 10:14 PM - Culture
Taipei to accept 48 students at new Digital Experimental High School
05/28/2022 10:10 PM - Sports
Taichung Suns beat New Taipei DEA to reach T1 LEAGUE finals
05/28/2022 09:35 PM - Sports
Taiwan's women's softball team to compete abroad from June
05/28/2022 09:17 PM