The US Dollar has been showing an unstoppable trend, adding downward pressure on regional currencies. New Taiwan Dollar, as many believe, may breach the NT$31 threshold even before the next Fed interest rate hike.
The recent three consecutive depreciation of the New Taiwan Dollar has caused the NTD to the USD exchange rate to break the NT$30.5 line of defense, fast approaching NT$31. Even though the Central Bank announced on Sept. 5 that it has not relinquished control to allow NTD to depreciate and will intervene to adjust, the NTD to the USD exchange rate on Sept. 6 opened with a rise then dropped, while the drop range increased intraday, depreciating below NT$30.8.
Chen Yo-chung, Foreign Exchange Analyst, Taishin Bank: “The FED will lift the interest rate again on Sept. 21, whereas we will at most increase from 0.125 percent to 0.25 percent. Before Sept. 21, we may see NTD against USD at NT$31.”
However, foreign exchange analysts forecast that the Central Bank will hold its grounds at the NT$31.74 threshold, last seen in 2019 during the "U.S.-China Trade War"
Chen Yo-chung, Foreign Exchange Analyst, Taishin Bank: “The trade surplus in July is approximately US$5 billion, so there shouldn't be too much room for large depreciation, and the NTD should not reach NT$32 that fast; likely will stay above NT$31.74.”
As the withdrawal of global funds and depreciation of the NTD continue to affect Taiwan Stock, the market reached 14,789 at one point, with a small rise intraday of 30 points. However, after 11 a.m., it immediately declined. Securities analysts note that the insufficient trading volume of Taiwan Stock may not hold the 14,000 threshold.
Liao En-ping, Professional Associate, Securities Investment Department, President Futures Co.: “The Taiwan Stock monthly and quarterly moving averages continue to decline, and it can only be resolved by an increase in trading volume. Given the severe inflation in the U.S. as well as the rising inflation in Europe, if the Central Bank speeds up its interest lift, the TAIEX may once again break the bottom.”
Analysts said that while the U.S. inflation slowed down, European inflation is a time bomb that may explode in Q4. If the interest rate hike cycle continues, global funds will keep withdrawing from the market, and Taiwan Stock may face substantial pressure.