The New Taiwan dollar dropped more than 8 percent against the US dollar in the Year of the Tiger, the steepest annual decline in 25 years, with the greenback bolstered by aggressive interest rate hikes made by the US Federal Reserve.
The NT dollar closed at NT$30.368 against the US dollar on Thursday, the last trading session before the Lunar New Year holiday, down NT$2.54, or 8.36 percent, for the lunar calendar year.
Beginning in 2019, the NT dollar appreciated in value for three consecutive years as it benefited from the US-China trade war, quantitative easing policies during the COVID-19 pandemic and robust domestic stock market growth.
Photo: CNA
It closed out the previous lunar year, the Year of the Ox, at NT$27.828 against the US dollar.
However, the Year of the Tiger brought a sharply different set of circumstances, with Russia’s invasion of Ukraine, rising inflation and the US Fed raising interest rates by a cumulative 425 base points.
As the US dollar soared, the NT dollar — facing pressure from declining exports — sank from NT$27 to a low of NT$32 against the greenback in a “rarely seen” margin of decline, a foreign exchange industry source told CNA.
Only when the Fed began signaling late last year that it would slow the rapid pace of interest rate increases, causing the US dollar to drop, was the NT dollar able to rebound slightly, the person said.
Looking ahead to the Year of the Rabbit, the US is likely to end its rate hikes, and possibly even lower rates at the end of this year, which would improve the NT dollar’s prospects of regaining some of the value it lost in the Year of the Tiger, the source said.
While falling US inflation has fanned speculation that the Fed would further slow its pace of interest rate hikes, several top US central bank officials have said more still needs to be done before they are satisfied prices are under control.
US Fed Vice Chair Lael Brainard on Thursday said policymakers would “stay the course” in lifting rates.
“Even with the recent moderation, inflation remains high and policy will need to be sufficiently restrictive for some time,” Brainard told an event in Chicago, adding that it would ensure inflation returns to 2 percent on a sustained basis.
At a separate event on Thursday, New York Fed President John Williams said inflation remained too high, and that bringing down prices would likely require a “period of below-trend growth and some softening of labor market conditions.”
While the Fed has taken strong action, “it is clear that monetary policy still has more work to do,” he said, adding that policy affects parts of the economy differently.
Semiconductor business between Taiwan and the US is a “win-win” model for both sides given the high level of complementarity, the government said yesterday responding to tariff threats from US President Donald Trump. Home to the world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), Taiwan is a key link in the global technology supply chain for companies such as Apple Inc and Nvidia Corp. Trump said on Monday he plans to impose tariffs on imported chips, pharmaceuticals and steel in an effort to get the producers to make them in the US. “Taiwan and the US semiconductor and other technology industries
SMALL AND EFFICIENT: The Chinese AI app’s initial success has spurred worries in the US that its tech giants’ massive AI spending needs re-evaluation, a market strategist said Chinese artificial intelligence (AI) start-up DeepSeek’s (深度求索) eponymous AI assistant rocketed to the top of Apple Inc’s iPhone download charts, stirring doubts in Silicon Valley about the strength of the US’ technological dominance. The app’s underlying AI model is widely seen as competitive with OpenAI and Meta Platforms Inc’s latest. Its claim that it cost much less to train and develop triggered share moves across Asia’s supply chain. Chinese tech firms linked to DeepSeek, such as Iflytek Co (科大訊飛), surged yesterday, while chipmaking tool makers like Advantest Corp slumped on the potential threat to demand for Nvidia Corp’s AI accelerators. US stock
The US Federal Reserve is expected to announce a pause in rate cuts on Wednesday, as policymakers look to continue tackling inflation under close and vocal scrutiny from US President Donald Trump. The Fed cut its key lending rate by a full percentage point in the final four months of last year and indicated it would move more cautiously going forward amid an uptick in inflation away from its long-term target of 2 percent. “I think they will do nothing, and I think they should do nothing,” Federal Reserve Bank of St Louis former president Jim Bullard said. “I think the
SUBSIDIES: The nominee for commerce secretary indicated the Trump administration wants to put its stamp on the plan, but not unravel it entirely US President Donald Trump’s pick to lead the agency in charge of a US$52 billion semiconductor subsidy program declined to give it unqualified support, raising questions about the disbursement of funds to companies like Intel Corp and Taiwan Semiconductor Manufacturing Co (台積電). “I can’t say that I can honor something I haven’t read,” Howard Lutnick, Trump’s nominee for commerce secretary, said of the binding CHIPS and Science Act awards in a confirmation hearing on Wednesday. “To the extent monies have been disbursed, I would commit to rigorously enforcing documents that have been signed by those companies to make sure we get
RSS