Fed Holds Steady as Taiwan Stocks Plunge
As expected, the US Federal Reserve held rates steady, with all four major US stock indexes closing higher, but tech giants posted mixed earnings and doubts over AI investment returns lingered. On the 29th, Taiwan stocks closed down 667 points, with the rebound lasting only one day before reversing, mainly as foreign investors swung from buying to selling. A forex desk head said that although the Fed held steady, markets still expect a 1碼 hike in December, the dollar index reacted little after the meeting and remained range-bound at highs, with fund flows still the biggest factor and Taiwan stocks remaining the main reference.
Heavy Foreign Selling Pushes NT Dollar Toward 32.6
Foreign investors sold a net 688.15億元 on the 29th, with large fund outflows not only boosting FX turnover but also weighing on the NT dollar intraday. Total turnover was 38.81億 US dollars. The NT dollar opened slightly higher against the US dollar before turning lower, with losses widening after midday to an intraday low of 32.595, almost touching the 32.6 level, down 0.23% on the day for the largest drop in over a week, ending two straight days of gains, and closing at 32.492, down 7.4分. Exporters and some US dollar holders took profits intraday, slightly slowing the pace of depreciation.
Central Bank Steps In Late; Range-Bound in the Near Term
Late in the session the central bank intervened again, capping the decline to within 1角 and barely holding the 32.4 level. A forex desk head noted the NT dollar has recently tracked Taiwan stocks closely, rising with foreign inflows after the holiday and falling again on the 29th; even though the central bank stresses it sets no line in the sand for the NT dollar, with the intraday drop approaching 2角, intervention intensified, also boosting full-day trading volume. This week is a global super central-bank week: although the US paused rate hikes, markets read Warsh's comments as hawkish, the dollar remains relatively strong, and non-US currencies have no chance to rebound for now. The European Central Bank will announce its rate decision later, while the Bank of Japan follows on the 30th, with markets widely expecting the Bank of Japan to hold rates steady and focusing on whether Governor 植田和男 signals further rate hikes, with yen moves also shaping expectations for Asian currencies. In the near term the NT dollar remains range-bound, hovering around the 32.5 level, with a possible retest of the prior low of 32.7; with a firm dollar and volatile Taiwan stocks, and no clear turn to inflows by foreign investors, it will be hard for the NT dollar to reverse its weak pattern.