COST OF LIVING/U.S. dollar rises to almost 3-year high amid Fed rate hike concerns

The U.S. dollar continued its uptrend Monday, hitting its highest level against the Taiwan dollar on the local forex market amid rising expectations of more aggressive interest rate hikes by the United States Federal Reserve.

After opening at the day's low of NT$30.620 and moving to a high of NT$30.770, the greenback ended up NT$0.122 higher at NT$30.710, the highest level since Oct. 16, 2019, when the American dollar ended at NT$30.722.

The greenback got a boost from a spike in the U.S. dollar index, which tracks the currencies of Washington's major trading partners against the U.S. dollar, on expectations that the Fed will speed up the pace at which it hikes interest rates to take on high inflation.

The U.S. dollar index rose to a high of 110 for the first time since early June, adding downward pressure Monday on regional currencies, including the Taiwan dollar, dealers said.

In addition, the American unit continued to trade at more than 140 Japanese yen, serving as a reference for the Taiwan dollar that kept it trending lower throughout the session, dealers said.

Meanwhile, a net sell of NT$3.07 billion in shares on Taiwan's main stock exchange by foreign institutional investors Monday further pushed down the Taiwan dollar as they moved their funds into U.S. dollar denominated assets, dealers said.

Without any intervention from Taiwan's central bank to shore up the local currency, the U.S. dollar is likely to challenge the NT$31 mark soon, they said.

Commenting on the U.S. dollar fluctuations, Tsai Chiung-min (???), head of the central bank's Foreign Exchange Department, did not respond to whether the bank jumped into the market Monday, but he said the bank's intervention was seen in July, August and early September.

Source: Focus Taiwan News Channel