Fed Holds Steady as Market Focuses on December Move
The U.S. Federal Reserve decided to leave interest rates unchanged at this meeting, with a vote of 10 in favor and 2 opposed, and the market is now more focused on whether rates will be raised at the December meeting. U.S. stocks rose in response, with the four major indexes extending gains and the Philadelphia Semiconductor Index rising for a fourth straight day, but tech giants reported mixed earnings and investors' concerns over debt-funded AI buildout have not dissipated. The dollar index stayed around the 102 level, oscillating at high levels to fall 0.26%, while the euro edged up 0.19% ahead of the European Central Bank announcement.
Taiwan Stocks Fall 667 Points and Lose Quarterly Line Again
Taiwan stocks opened lower and moved lower on October 29, with the weighted index falling 667.25 points to close at 46368.33 points, losing the quarterly moving average again. The three major institutional investors sold a combined NT$81.666 billion, with foreign investors switching from buying to selling with net sales of NT$68.815 billion, leaving only domestic investment trusts on the buying side with net buying for 13 consecutive trading days. As hot money turned to outflows, weakness in Taiwan stocks added to stock-FX pressure, foreign investors did not明显回流, and Taiwan stocks have yet to regain 47,000.
NT Dollar Approaches 32.6 Intraday as Central Bank Intervenes Late
The NT dollar against the U.S. dollar opened slightly higher in the morning, but as hot money continued to leave, the rate broke straight through the 32.4 and 32.5 levels, and with foreign investors remitting funds out on a large scale in the afternoon, it touched a low of 32.597, depreciating nearly 1.8 jiao and standing just half a step away from 32.6. With the last two trading days of end-October approaching, exporters sold foreign exchange near 32.5, while the central bank stepped in before the close to cap the depreciation within 1 jiao, finally closing at 32.492, down 7.4 cents, ending a two-day winning streak, with total turnover of US$3.881 billion.
0.23% Drop Makes It Weakest Asian Currency, Biased Weak in Near Term
The NT dollar's single-day depreciation of 0.23% was the largest in a week, making it the weakest Asian currency. Other major Asian currencies mostly rebounded over the same period, with the Korean won surging 0.25%, the Singapore dollar and renminbi edging up 0.09% and 0.08% respectively, and the yen slipping 0.03% ahead of the Bank of Japan decision. Foreign exchange dealers analyzed that with the market expecting a possible 1-code rate hike in December, the dollar index oscillating at high levels, weaker Asian currencies, plus weakness in Taiwan stocks, stocks and the currency suffered a double blow. Although the central bank does not set a defense line, it still steps in to intervene when intraday depreciation reaches about 2 jiao, and after approaching 32.6 in the near term, a retest of the low-32.7 range front end cannot be ruled out.