The New Taiwan dollar posted three consecutive reds and closed at a new high in more than three months. (Photo by reporter Chen Meiying)
[Reporter Chen Meiying/Report from Taipei] Due to rising market expectations for the Bank of Japan to raise interest rates and driven by short covering of the yen, the yen surged above 153 yuan against the US dollar this morning, hitting a seven-month high, which also led to the simultaneous strengthening of major Asian currencies. Among them, the exchange rate of the New Taiwan dollar against the U.S. dollar rose to a maximum of 31.465 yuan in early trading, setting a new high in the band. However, in the afternoon, Taiwan stocks closed late in the afternoon, and the exchange rate also turned black for a time. It finally closed at 31.535 yuan, an appreciation of 1.7 cents. The exchange rate had three consecutive reds, hitting a new high in more than three months, with a trading volume of US$2.5415 billion.
Taiwan stocks fell 220.49 points today to close at 47105.78 points, with the three major legal entities selling over 9.987 billion yuan in total. Among them, foreign investors still bought more than 13.268 billion yuan, but this was significantly reduced from the previous trading day's overbuying of more than 90 billion yuan.
The director of Huiyin said that the New Taiwan Dollar was mainly stimulated by factors such as the strong yen, the weak U.S. dollar, and the inflow of hot money driven by foreign investors' aggressive buying of Taiwanese stocks the day before. However, in the afternoon, the Taiwanese stock market closed at the end of the day, and some foreign investors took profits and remitted funds. The New Taiwan Dollar exchange rate once turned from red to black, reaching a low of 31.565 yuan, and the prefix 31.4 was gained and lost again.
Judging from the performance of major Asian currencies, according to central bank statistics, as of 4 p.m., the U.S. dollar index fell by 0.08%, the Japanese yen rose by 1.14%, the New Taiwan dollar and the Star Dollar both appreciated by 0.05%, the Korean won appreciated by 0.04%, and the RMB remained flat. Among them, the Japanese yen rose significantly ahead of other Asian currencies and became the focus of the Asian foreign exchange market today.
The director of Huiyin pointed out that the strong appreciation of the yen is mainly due to the market's renewed bets on the Bank of Japan raising interest rates in September. In addition, the rapid appreciation of the yen has forced the previously established short yen orders to stop losses and cover losses, making the rise even faster. If expectations of a rate hike by the Bank of Japan continue to rise, and short positions continue to be covered, the yen will not rule out further challenges to the 150 price level in the future.
The strong rise in the Japanese yen has also had an encouraging effect on Asian currencies. However, whether the New Taiwan dollar can break through 31.5 yuan, or even further challenge 31.2 yuan, the movement of foreign capital remains the key.
On the other hand, the market is still waiting for the inflation data released by the United States this week. Currently, the interest rate futures market still has no more than 60% expectation that the Federal Reserve will raise interest rates in September. An executive from Huiyin said that if the U.S. CPI is higher than market expectations, it may re-raise market expectations for the Fed's tightening policy and drive the U.S. dollar to rebound. At that time, the rise of Asian currencies and the New Taiwan dollar may be suppressed.
