U.S. stocks surged after the Federal Reserve announced another quarter of a percentage point raise and slowing down on the pace of increases. Taiwan's stock market took off as well, with the NT dollar strengthening against the U.S. currency.
The Federal Reserve raised its interest rate a quarter of a percentage point on Wednesday the 1st, as inflation eased somewhat but remains elevated. How does that affect Taiwan?
Wang Mei-hua, Minister, MOEA: “If you take a look at the attitude of coming back to work and how the stock market is doing after the long break, it shows that people are quite confident about Taiwan's economic development in the near future. The Ministry of Economic Affairs will continue to support and push Taiwan's industries forward.”
U.S. stocks jump after the Fed announced smaller rate hikes to tame inflation. The PHLX Semiconductor Index rose above 5 percent and the Taiwan stock market picked up its momentum soon after. The TAIEX index opened at 15,508.83 points on the 2nd, with an intraday high of 15,571.14 points. It rose 151 points at one point. With Taiwanese shares rising and foreign fund inflowing, the NT dollar is going strong against the U.S. dollar. It opened at NT$29.9, made its way through NT$29.9 and NT$29.8, and rose to NT$29.6 against the U.S. dollar during intraday. The exchange rate hit a nearly 8-month high since June of 2022.
Li Chi-chan, Foreign Exchange Analyst: “The NT dollar will remain slightly stronger against the U.S. dollar as long as the rate hikes are in smaller increments. This situation is unlikely to reverse during the first half of the year, at least not before the second quarter.”
Li Yung-nien, VP, Chi Far Securities Investment Consultant Co., Ltd.: “If the U.S. stock market continues to do well, then first of all, the NT dollar would continue to do well. It would also continue to attract foreign investment, which would greatly encourage Taiwan's stock market. However, if the U.S. stock market suffers from a bad rebound, it would stir up the Taiwan stock market again.”
Financial experts predict that the U.S. dollar will remain weak, while non-U.S. currencies will remain strong, and the Taiwan stock market is expected to perform well during the first quarter of 2023.