Amid eased concerns over an aggressive U.S. Federal Reserve, the U.S. dollar fell below the NT$30 mark to its lowest in more than five months against the Taiwan dollar Wednesday, dealers said.
After moving between NT$29.940 and NT$30.090, the greenback moved lower by NT$0.087 to close at NT$29.965, a new low since Aug. 11, 2022, when the American currency ended at NT$29.942 against the Taiwan dollar.
Dealers said the weakness of the U.S. dollar extended from a session earlier after the employment cost index, which serves as an important factor in the Fed's monetary policy, showed compensation rose 1 percent in January, slightly less than an earlier market estimate of 1.1 percent, prompting investors to think the Fed will slow down the pace of its current rate hike cycle.
The Fed will wrap up a two-day policymaking meeting later in the day, and the market widely anticipates that the U.S.central bank will raise its key interest rates by only 25 basis points, instead of the 75-basis point increase at the last meeting.
Optimism over a more favorable Fed policy led foreign investors to move more funds into the region, pushing down the U.S. dollar, while a rally staged by the local stock market on strong foreign institutional buying created more downward pressure on the greenback throughout the session, dealers said.
The Taiex, the weighted index on the Taiwan Stock market, rose 154.93 points, or 1.01 percent, at the day's high of 15,420.13 Wednesday after foreign institutional investors bought a net NT$10.25 billion worth of shares on the main board.
Dealers said Wednesday was the second consecutive trading session the U.S. dollar has fallen below NT$30 mark. However, on Tuesday the local central bank stepped in to help the greenback end above NT$30.
On Wednesday, dealers said, it seemed the central bank scaled back its intervention efforts to allow the greenback to close below NT$30.
The U.S. dollar is likely to continue to move lower in the local forex market on the back of continued fund inflows, dealers added.
Source: Focus Taiwan News Channel