The US Dollar Has Reached a 34-Month High

The US dollar rose further against the Taiwanese yuan on Friday, reaching its highest level in 34 months, hoping the US Federal Reserve will maintain its aggressive monetary policy.

The dollar increased NT$0.056 from the previous day to NT$30.588 on the Taipei currency market on Friday, the highest level since October 21, 2019, when it ended at NT$30.611. Before the closing, the US dollar opened at NT$30.561 and fluctuated between NT$30.531 and NT$30.599.

Mester’s comments came after Fed Chair Jerome Powell stated on August 26 that the American central bank would likely prolong a rate hike cycle “for some time” to combat inflation.

In this context, the US dollar index, which tracks the currencies of Washington’s key trading partners, surged above 109 as international investors shifted funds out of the region, causing regional currencies to fall.

Yen Falls Too

The Taiwan dollar’s collapse mirrored a decrease in other regional currencies, most notably the Japanese yen, which went below 140 against the US dollar at one point for the first time since 1998. This week, the US dollar gained NT$0.371, or 1.2 percent, against the Taiwan currency, marking the sixth week of advances. The US dollar is likely to soar to NT$30.81 soon as interest rates in the US rise.

Analysts may have argued in mid-August that, after a dramatic drop since March, the yen’s weakness against the dollar had likely reached its maximum. They felt that the 24-year low of 139 to the dollar attained in mid-July had proven a strong level of resistance; the new balance of probability now pointed to a period of yen strength into the calendar year’s end, with several anticipating a gain. Traders believe that other sources of yen flows will be increasingly prominent in the coming months. After much delay, Japan appears to be edging towards reopening its borders to foreign tourists on a wide scale.