The cycle of Fed rate hikes is not over yet! US dollar strengthens, New Taiwan dollar falls below 31.8 yuan

The cycle of Fed rate hikes is not over yet! The US dollar strengthens and the New Taiwan dollar drops below 31.8 yuan (photo by reporter Chen Meiying)

[Reporter Chen Meiying/Taipei Report] The Federal Reserve meeting minutes released a hawkish signal. U.S. bond yields and the U.S. dollar both rose. The four major U.S. stock indexes closed in the black. Taiwan stocks also fell in early trading. The New Taiwan dollar exchange rate fell below 31.8 yuan against the U.S. dollar, hitting a low of 31.885 yuan and approaching 31.9 yuan.

The New Taiwan dollar temporarily closed at 31.876 yuan at noon, depreciating 8.1 cents. The trading volume of Taipei Foreign Exchange Brokerage Company was US$970 million.

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Minutes of the Federal Reserve meeting showed that most officials still believe that another interest rate hike may be necessary before the end of this year, and officials still lack confidence in the progress of cooling inflation. Recently, affected by weakening labor data and dovish comments from Federal Reserve officials, the market's expectations for the Fed's interest rate hike in October have significantly cooled down. However, the meeting minutes showed that the interest rate hike cycle has not yet completely ended, prompting the market to re-evaluate the possibility of the Fed maintaining high interest rates for longer, driving U.S. bond yields and the U.S. dollar higher, while U.S. stocks fell under the pressure of rising interest rates and high valuations.

The New Taiwan dollar opened at 31.82 yuan today, depreciating 2.5 cents. Affected by the increase in US dollar buying, the exchange rate continued to fall, hitting an intraday low of 31.885 yuan, down nearly 1 cent.

In addition to the external pressure of the U.S. stock market closing in the black, Taiwan stocks have fluctuated at a high level after approaching the 50,000-point mark. In addition, with the National Day holiday tomorrow, foreign investors have oversold for two consecutive days. The market has a strong atmosphere of high-end profit-taking, which has also made bullish operations more cautious, further suppressing the trend of the New Taiwan Dollar. Whether the New Taiwan dollar can fall below 31.9 yuan in the afternoon, foreign investment trends and the central bank's attitude will become the focus of market observation.

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