Bloomberg
Taiwan facilitates currency intervention, aided by rising dollar
(Bloomberg) – Follow Bloomberg on LINE messenger for all the business news and analysis you need. The setback and the weakness in global technology stocks are limiting demand for Taiwan’s currency, which is reducing pressure on the central bank to slow its appreciation. , it was an almost daily affair for the Taiwanese dollar to jump more than 1% intraday, or even almost 2%, in some cases, to end the session almost flat. Over the past week or so, the pattern has disappeared as traders refrain from pushing the local currency much stronger. This is good news for the central bank. Net foreign exchange purchases in Taiwan amounted to 5.8% of gross domestic product in 2020, as officials wanted to limit the rate of the currency’s rise. The fading strength gives the monetary authority some breathing space during its policy meeting on Thursday, with all economists in a Bloomberg survey predicting that the norm rate will remain unchanged at 1.125%. Less interference could also deviate from possible criticism from the US Treasury when it released its report on economies to be named currency manipulators next month. Governor Yang Chin last week downplayed concerns about the manipulator label, saying Switzerland, Singapore and Hong Kong are also intervening in their respective foreign exchange markets. “According to the US Treasury in April, the central bank is likely to reduce currency intervention, which will cause the Taiwanese dollar to rise slightly,” said Liu Chengyu, an economist at First Capital Management Inc. in Taipei, said. The Taiwanese dollar climbed about 6% of Asia’s best performances last year. This changed little in 2021 in that the central bank did not strengthen the currency by more than 28 per greenback on a closing basis. The central bank reduced its purchase of dollars last month as the US currency strengthened, reserve reserves show. The flow of the stock market in Taiwan is increasing. Foreign investors raised nearly $ 3 billion from local equities this month, almost the most since May, as the market sank. In November, net inflows reached $ 6.2 billion, the largest in 15 years. Taiwan Semiconductor Manufacturing Co. fell nearly 10% from its record in January, wiping out $ 68 billion in value. “The broad dollar theme is likely to continue into the second quarter, which will help the central bank facilitate intervention,” Stephen said. Chiu, Asia FX and rated strategist at Bloomberg Intelligence. “Intervention may return later, although the dollar weakness returns after all, Taiwan’s macro position remains resilient compared to its global counterparts.” us at bloomberg.com Sign up now to stay ahead of the most trusted business news source. © 2021 Bloomberg LP