Taiwan stocks continue to rebound and assist! The New Taiwan dollar rose from depreciation to temporarily close at 32.84 yuan

[Reporter Chen Meiying/Taipei Report] U.S. inflation in October was higher than expected, coupled with Federal Reserve Board Governor Waller's hawkish remarks, pushing the U.S. dollar to strengthen. The New Taiwan dollar exchange rate against the U.S. dollar once fell to 32.968 yuan in early trading, depreciating by more than 1 dime. However, as the Taiwan stock market continued to rebound and the pressure on foreign capital remittances eased, the exchange rate subsequently rose from depreciation, reaching a maximum of 32.83 yuan. It temporarily closed at 32.84 yuan at noon, an appreciation of 2.5 cents. The trading volume of Taipei Foreign Exchange Brokerage Company was US$917 million.

The U.S. consumer price index (CPI) and core CPI increased by 0.4% and 0.3% in October, both higher than market expectations. Among them, core CPI maintained an increase of 0.3% for three consecutive months, indicating that inflationary pressure has not subsided.

Waller said before the data was released that even if inflation improves in October, he still supports a 1-cent rate hike in December; if the monthly core CPI growth rate remains about 0.3% or higher, a 2-digit rate hike should be considered.

After the data was released, market doubts that the Federal Reserve would speed up interest rate hikes increased, driving U.S. bond yields to rise in tandem with the U.S. dollar. According to the CME Group's FedWatch tool, the chance of a 1-digit rate hike in December is about 90%, and the chance of a 2-digit rate hike is about 10%.

The New Taiwan dollar first reflected the strengthening of the US dollar this morning. After opening at 32.89 yuan, it quickly fell below 32.9 yuan, hitting a low of 32.968 yuan. However, Taiwan Semiconductor Manufacturing Co.'s bullish support supported the continued rebound of Taiwan stocks, and the strength of foreign capital remittances weakened. The New Taiwan dollar once rebounded to 32.83 yuan.

Looking ahead to the market outlook, whether the U.S. dollar can continue to be strong and whether the demand for remittances after foreign investors sell stocks is further reduced will still be the key to the trend of the New Taiwan dollar. If the rebound in the Taiwan stock market can lead to the continued convergence of foreign selling pressure, and exporters selling foreign exchange on rising prices, it will help ease depreciation pressure; however, if the U.S. dollar continues to strengthen and foreign remittances increase again, the 33-yuan mark may still face a test.