U.S. dollar suffers steepest daily decline on Taipei forex since 2002

Taipei, May 2 (CNA) The U.S. dollar dropped 3.07 percent against the Taiwan dollar Friday, the largest singe day fall since 2002, in the wake of large foreign fund inflows, dealers said.

The greenback closed down NT$0.953 or 3.07 percent at NT$31.064 against the Taiwan dollar, the lowest since Jan. 9, 2024, when the U.S. currency ended at NT$31.023.

The U.S. dollar's sharp losses on Friday made the Taiwan dollar the strongest-performing currency in Asia. In comparison, the South Korean won rose 0.81 percent, the Singapore dollar gained 0.19 percent, the Japanese yen fell 1.61 percent against the greenback, and the Chinese yuan was little changed.

Dealers said that with the U.S. dollar dipping to the day's low of NT$30.770, down more than NT$1.20 during the session, the central bank stepped in to cap the losses suffered by the greenback and ease market volatility, but the bank's buying of the U.S. dollar was limited.

The central bank released a statement Friday evening, admitting its intervention in the local foreign exchange market in the day.

In addition to the fund inflows, the U.S. dollar also came under pressure as the local stock market steamed ahead led by the bellwether electronics sector, with the benchmark weighted index on the Taiwan Stock market soaring 552.61 points, or 2.73 percent, to close at the day's high of 20,787.64, dealers said.

Foreign institutional investors bought a net NT$38.77 billion worth of shares on the local main board Friday, increasing the downward pressure on the U.S. dollar throughout the session, dealers added.

For the week, the U.S. unit shed NT$1.462, or 4.71 percent, against the Taiwan dollar, marking the fifth consecutive week the currency has fallen on the Taipei foreign exchange market.

In another statement released Thursday, the central bank said it has not received any request from the U.S. Department of the Treasury to push for an appreciation of the Taiwan dollar, amid speculation fueled by the currency's recent sharp rise against the U.S. dollar.

In response to the rapid appreciation of the Taiwan dollar on Friday, Premier Cho Jung-tai (卓榮泰) said the foreign exchange rate is largely dictated by international market conditions, and that the government did not come under any pressure to push up the local currency's value.

Cho emphasized the value of the Taiwan dollar is decided by a market mechanism.

Hsu Wen-tung (許文通), chief secretary of the Taiwan Association of Machinery Industry, meanwhile, told CNA that a sharply stronger Taiwan dollar is expected to undermine the competitiveness of Taiwanese machinery exporters in the global market and lead to foreign exchange losses.

Hsu urged the government to do its best to stabilize the Taiwan dollar and called for allowing the local currency to depreciate against the U.S. dollar.

Amid uncertainties stemming from the Trump administration's tariff policies, a stronger Taiwan dollar has added to the challenges faced by machinery suppliers, Hsu said.