Taipei: The U.S. dollar closed above the NT$33 mark Monday, reaching its highest level against the Taiwan dollar in nearly nine years amid concerns that the U.S. Federal Reserve may decelerate the pace of its rate cuts, dealers reported. The greenback opened at the day's low of NT$32.980, climbed to a high of NT$33.136, before closing at NT$33.119, marking the highest close since March 9, 2016, when it ended at NT$33.225 against the Taiwan dollar.
According to Focus Taiwan, the U.S. dollar experienced a significant boost due to an increase in the U.S. dollar index, which measures the value of the greenback against the currencies of Washington's six major trading partners. This strength followed nonfarm payroll data indicating the U.S. economy added 256,000 jobs in December, surpassing expectations of around 153,000 jobs. This robust economic activity diminished hopes for rapid Fed rate cuts.
Additionally, pressure on the Taiwan dollar was exacerbated by a sell-off in the local stock market. The Taiex, Taiwan Stock Exchange's benchmark weighted index, plummeted over 500 points to close below the 22,500-point level. On Monday, foreign institutional investors recorded a net sell of NT$55.60 billion in shares on the exchange, marking the 11th highest net sell in history, as they redirected funds to U.S.-denominated assets.
Taiwan's exporters also seemed hesitant to sell their U.S. dollars in exchange for the Taiwan dollar, anticipating a potential further rise in the greenback's value. The Taiwan dollar was not alone in facing pressure; all Asian currencies depreciated against the greenback on Monday.