The U.S. dollar continued its upswing Friday, reaching its highest level against the Taiwan currency in 34 months, on expectations that the U.S. Federal Reserve will maintain its aggressive monetary policy, dealers said.
The greenback rose NT$0.057 from the previous day to close at NT$30.588 on the Taipei forex market Friday, the highest level since Oct. 21, 2019, when it ended at NT$30.611.
The U.S. currency opened at NT$30.560, and moved between NT$30.530 and NT$30.599, before the close.
According to dealers, the hike in the U.S. dollar was driven by investors' projections that the Fed will raise interest rates by another 150 points, after Cleveland Fed President Loretta Mester said earlier this week that she expected the benchmark interest rates to climb above 4 percent by early next year.
Mester's remarks came after Fed Chair Jerome Powell indicated on Aug. 26 that the American central bank was likely to maintain a rate hike cycle "for some time" to stamp out inflation.
Against that background, the U.S. dollar index, which tracks the currencies of Washington's major trading partners, rose above 109, as foreign investors moved their funds out of the region, pushing down regional currencies, dealers said.
The weakness of the Taiwan dollar also reflected a drop in other regional currencies, in particular the Japanese yen, which fell below 140 against the U.S. dollar at one point for the first time since 1998, dealers added.
In addition, a 0.87 percent fall in the Taiex, the benchmark weighted index on the Taiwan Stock, put pressure on the Taiwan dollar, after foreign institutional investors sold a net NT$14.63 billion worth of shares on the main board Friday.
This week, the greenback rose NT$0.370, or 1.2 percent, against the Taiwan dollar, marking the sixth consecutive week of gains.
The American currency is expected to rise soon to NT$30.80, driven by higher interest rates in the U.S., according to dealers.
Source: Focus Taiwan News Channel