As a strong US dollar drives up currency volatility across Asia, an artificial intelligence (AI)-fueled tech boom has offered Taiwan some reprieve.
The local currency weakened less than the won and the yen last month, a turbulent month for the region, as US Federal Reserve (Fed) policy bets shifted.
That relative strength came even as authorities kept the amount of intervention “similar to” the previous two months, a central bank official said last week.
Photo: Tyrone Siu, Reuters
Analysts attributed the resilience to a tech-led exports recovery that is allowing a steady supply of US dollars, and an equities rebound driven by foreign inflows.
Taiwanese stocks capped a third straight week of net inflows and the local benchmark has outperformed its peers since the middle of last month, exchange data showed.
Yesterday, the TAIEX closed up 0.72 percent and the New Taiwan dollar ended 0.07 percent higher against the US dollar in Taipei trading.
“Taiwan doesn’t need to step up intervention like Japan due to a rebound in the electronics and semiconductor industries,” Department of Foreign Exchange Director-General Eugene Tsai (蔡炯民) said in a press briefing last week.
US dollar supply was “relatively stable,” Tsai added.
A gauge measuring swings in the NT dollar over a rolling 30-day period — known as historical volatility — trails that of the won and the yen, data compiled by Bloomberg showed.
The local currency fell 1.7 percent against the greenback last month, less than the won and the yen.
Its slump spurred verbal warnings from authorities in South Korea and suspected intervention in Japan during the month.
South Korea and Japan teamed up to air concerns over their currency’s weakness in the middle of last month.
Meanwhile, Bank Indonesia hiked interest rates in a surprise move to defend the rupiah.
In contrast, officials in Taiwan have refrained from sending such a strong message to the market.
Taiwan’s central bank “didn’t need to intervene too much because local equities performance is good,” BNP Paribas SA greater China foreign exchange and rates strategy head Ju Wang (王菊) said.
A lack of financial instability and a stable foreign exchange supply due to the exports recovery have allowed Taiwan’s central bank to “keep a relatively hands-off stance,” BNP said.
Taiwan’s exports to the US jumped 81.6 percent year-on-year to US$10.2 billion last month, driven by shipments of information, communication and audio-video products.
Hon Hai Precision Industry Co (鴻海精密), which assembles a majority of Apple Inc’s smartphones, is one of the biggest contributors to the local bourse’s rebound since April 22.
However, policymakers’ stance on currency might shift if the US dollar resumes its uptrend or foreigners turn their back on the local stock market.
If Fed speakers continue to guide markets to price in later or fewer interest rate cuts, or even a hike, US dollar strength might return and Taiwanese officials might still need to be active on intervention, Oversea-Chinese Banking Corp (華僑銀行) foreign exchange strategist Christopher Wong (黃經隆) said.
SEMICONDUCTORS: The firm has already completed one fab, which is to begin mass producing 2-nanomater chips next year, while two others are under construction Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, plans to begin construction of its fourth and fifth wafer fabs in Kaohsiung next year, targeting the development of high-end processes. The two facilities — P4 and P5 — are part of TSMC’s production expansion program, which aims to build five fabs in Kaohsiung. TSMC facility division vice president Arthur Chuang (莊子壽) on Thursday said that the five facilities are expected to create 8,000 jobs. To respond to the fast-changing global semiconductor industry and escalating international competition, TSMC said it has to keep growing by expanding its production footprints. The P4 and P5
DOWNFALL: The Singapore-based oil magnate Lim Oon Kuin was accused of hiding US$800 million in losses and leaving 20 banks with substantial liabilities Former tycoon Lim Oon Kuin (林恩強) has been declared bankrupt in Singapore, following the collapse of his oil trading empire. The name of the founder of Hin Leong Trading Pte Ltd (興隆貿易) and his children Lim Huey Ching (林慧清) and Lim Chee Meng (林志朋) were listed as having been issued a bankruptcy order on Dec. 19, the government gazette showed. The younger Lims were directors at the company. Leow Quek Shiong and Seah Roh Lin of BDO Advisory Pte Ltd are the trustees, according to the gazette. At its peak, Hin Leong traded a range of oil products, made lubricants and operated loading
The growing popularity of Chinese sport utility vehicles and pickup trucks has shaken up Mexico’s luxury car market, hitting sales of traditionally dominant brands such as Mercedes-Benz and BMW. Mexicans are increasingly switching from traditionally dominant sedans to Chinese vehicles due to a combination of comfort, technology and price, industry experts say. It is no small feat in a country home to factories of foreign brands such as Audi and BMW, and where until a few years ago imported Chinese cars were stigmatized, as in other parts of the world. The high-end segment of the market registered a sales drop
Citigroup Inc and Bank of America Corp said they are leaving a global climate-banking group, becoming the latest Wall Street lenders to exit the coalition in the past month. In a statement, Citigroup said while it remains committed to achieving net zero emissions, it is exiting the Net-Zero Banking Alliance (NZBA). Bank of America said separately on Tuesday that it is also leaving NZBA, adding that it would continue to work with clients on reducing greenhouse gas emissions. The banks’ departure from NZBA follows Goldman Sachs Group Inc and Wells Fargo & Co. The largest US financial institutions are under increasing pressure
RSS