The dollar advanced against the euro as traders said the decline after the US Federal Reserve lowered the target lending rate to near zero this week was too fast to be sustained.
The euro also weakened after the European Commission said the region may suffer a “substantial” effect from the financial crisis next year.
The yen traded near a 13-year high against the dollar, even after the Bank of Japan lowered its benchmark interest rate to 0.1 percent.
“This was the most concentrated, rapid rally in the euro since its creation,” said Robert Sinche, head of global currency strategy at Bank of America Corp in New York. “The market got a little ahead of itself in the short run. We are getting a healthy correction now.”
The dollar climbed 2.6 percent to US$1.3874 versus the euro at 12:01pm in New York, from US$1.4240 on Thursday, when it slumped to a 12-week low of US$1.4719.
The euro fell 2.5 percent to ¥124.28 from ¥127.44. The dollar traded at ¥89.48, compared with 89.43. It dropped to ¥87.14 two days ago, the lowest level since 1995.
The US currency declined 2.9 percent against the euro on Wednesday, the biggest drop since the 15-nation currency’s 1999 debut.
The nine-day relative strength index of the dollar versus the euro, a comparison of the magnitude of gains and losses, was at 21.44 yesterday, below the level of 30 that signals a change in direction may be imminent.
“This is not a fundamentally driven move in the euro,” said Lutz Karpowitz, a Frankfurt-based currency strategist at Commerzbank AG. “We have very low liquidity right now, and volatility is very high.”
Asian currencies gained this week, led by South Korea’s won and Malaysia’s ringgit, as a rally in regional stocks helped draw funds. The NT dollar jumped the most in a decade.
Eight of the 10 most-active Asian currencies outside Japan rose on speculation that US interest rates as low as zero are fueling demand for higher-yielding assets. The won, Asia’s worst performer this year, strengthened 14 percent this month. Hong Kong’s dollar was unchanged at the upper end of its fixed exchange-rate band.
“The dominant swing in emerging Asia currencies has been the shift away from the dollar,” said David Cohen, director of Asian forecasting at Action Economics in Singapore and a former Fed official.
The won strengthened 6.4 percent this week to 1,290 per dollar.
Malaysia’s ringgit had its best week since a peg to the dollar ended more than three years ago.
The ringgit rose 3.3 percent this week to 3.4687 per dollar and touched an 11-week high of 3.4390 in Kuala Lumpur yesterday.
The Philippine peso, which had its best week since July, weakened yesterday after the central bank cut its key interest rate on Dec. 18 by more than economists forecast.
Singapore’s dollar gained 2.7 percent this week to S$1.4537 against the US currency. The yuan slipped 0.1 percent to 6.8465.
The NT dollar climbed 2.4 percent this week to NT$32.53 per dollar, its biggest gain since October 1998, as overseas investors bought more local stocks than they sold.
The central bank intervened on Thursday to check the currency’s advance, the China Times said yesterday, citing traders.
DISCONTENT: The CCP finds positive content about the lives of the Chinese living in Taiwan threatening, as such video could upset people in China, an expert said Chinese spouses of Taiwanese who make videos about their lives in Taiwan have been facing online threats from people in China, a source said yesterday. Some young Chinese spouses of Taiwanese make videos about their lives in Taiwan, often speaking favorably about their living conditions in the nation compared with those in China, the source said. However, the videos have caught the attention of Chinese officials, causing the spouses to come under attack by Beijing’s cyberarmy, they said. “People have been messing with the YouTube channels of these Chinese spouses and have been harassing their family members back in China,”
The Central Weather Administration (CWA) yesterday said there are four weather systems in the western Pacific, with one likely to strengthen into a tropical storm and pose a threat to Taiwan. The nascent tropical storm would be named Usagi and would be the fourth storm in the western Pacific at the moment, along with Typhoon Yinxing and tropical storms Toraji and Manyi, the CWA said. It would be the first time that four tropical cyclones exist simultaneously in November, it added. Records from the meteorology agency showed that three tropical cyclones existed concurrently in January in 1968, 1991 and 1992.
GEOPOLITICAL CONCERNS: Foreign companies such as Nissan, Volkswagen and Konica Minolta have pulled back their operations in China this year Foreign companies pulled more money from China last quarter, a sign that some investors are still pessimistic even as Beijing rolls out stimulus measures aimed at stabilizing growth. China’s direct investment liabilities in its balance of payments dropped US$8.1 billion in the third quarter, data released by the Chinese State Administration of Foreign Exchange showed on Friday. The gauge, which measures foreign direct investment (FDI) in China, was down almost US$13 billion for the first nine months of the year. Foreign investment into China has slumped in the past three years after hitting a record in 2021, a casualty of geopolitical tensions,
‘SOMETHING SPECIAL’: Donald Trump vowed to reward his supporters, while President William Lai said he was confident the Taiwan-US partnership would continue Donald Trump was elected the 47th president of the US early yesterday morning, an extraordinary comeback for a former president who was convicted of felony charges and survived two assassination attempts. With a win in Wisconsin, Trump cleared the 270 electoral votes needed to clinch the presidency. As of press time last night, The Associated Press had Trump on 277 electoral college votes to 224 for US Vice President Kamala Harris, the Democratic Party’s nominee, with Alaska, Arizona, Maine, Michigan and Nevada yet to finalize results. He had 71,289,216 votes nationwide, or 51 percent, while Harris had 66,360,324 (47.5 percent). “We’ve been through so
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