Super Central Bank Week is here! As U.S. inflation data heats up, the market is betting that the probability of the Federal Reserve (Fed) raising interest rates exceeds 80%, driving U.S. bond yields and the U.S. dollar index to rise simultaneously, putting Asian currencies generally under pressure. The exchange rate of the New Taiwan dollar against the U.S. dollar was further affected by the remittance of foreign hot money, which intensified the depreciation pressure. It once fell by more than 1 cent, touching 31.779 yuan, approaching the 31.8 yuan mark. The decline was restrained in the late trading after the central bank adjusted it, and finally closed at 31.688 yuan, a depreciation of 5 cents. The trading volume dropped slightly to 2.2755 billion US dollars.
Taiwan stocks fell 322.33 points today to close at 45,862.52 points. The three major legal persons collectively sold more than 49.703 billion yuan. Among them, although foreign investors continued to sell more than 36.964 billion yuan, and the amount was smaller than the previous trading day, the cumulative overselling amount in the past three trading days has exceeded 160 billion yuan, becoming the main source of pressure for the recent weakness in the stock and foreign exchange markets.
Huiyin people pointed out that originally there was still uncertainty in the market about whether the Fed would raise interest rates, but after the US PPI and CPI data were released last week, the market's expectations for the Fed to raise interest rates took a major turn.
However, as the European Central Bank announced a 1-point interest rate hike last week and left room for subsequent tightening, and the market also expected the Bank of Japan to accelerate the pace of interest rate hikes, although the U.S. dollar index strengthened, the rise was not particularly violent. The overall decline in Asian currencies was relatively limited, and the RMB even bucked the trend.
According to statistics from the central bank, as of 4 p.m., the U.S. dollar index rose 0.44%. In terms of major Asian currencies, the Singapore dollar depreciated the most by 0.22%, the Taiwan dollar depreciated 0.16%, the Japanese yen depreciated 0.11%, and the Korean won depreciated 0.04%. The RMB bucked the trend and edged up 0.03%.
Huiyin people believe that in addition to observing the Federal Reserve's movements in the market outlook of the New Taiwan Dollar, the policy decisions of the Bank of Japan and the Central Bank of Taiwan are also of great concern. In addition, the market's views on the future of technology stocks such as AI, as well as the inflow and outflow of foreign capital, will still be important factors affecting the Taiwan dollar's exchange rate.
Due to the recent increase in global central bank policy uncertainty, the market may turn to wait-and-see in the short term. In order to maintain the stability of the New Taiwan dollar exchange rate, the central bank is expected to make moderate adjustments to the market. The New Taiwan dollar does not rule out falling below the 31.8 yuan mark in the short term, but it may still fluctuate between 31.5 yuan and 32 yuan for more time, waiting for the central banks of various countries to announce interest rate decisions this week.
