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Taiwan: Taiwan dollar falls after China interest rate hike

Taiwan: Taiwan dollar falls after China interest rate hike

The Taiwan dollar weakened against the U.S. dollar this morning trading after China's surprise move to raise its benchmark interest rates on Tuesday, dealers said.

At 10:45 a.m., the Taiwan dollar traded at NT$30.933 to the U.S. dollar, compared with Thursday's close of NT$30.900.

The People's Bank of China raised its deposit and lending rates for the first time in 3 years Tuesday, a move intended to curb inflation and prevent an asset-price bubble, especially in the property market.

The Taiwan dollar opened lower against the U.S. dollar and was unable to rebound early as foreign banks rushed to restore their U.S. dollar positions after recent massive selling of the greenback, dealers said.

The U.S. dollar had appeared stronger against the Taiwan dollar in recent trading sessions as traders pocketed profits from strong gains posted by the local currency, dealers said.

The interest rate hikes in China have further boosted buying in the greenback, they added.

Dealers said there have been concerns that other central banks in the region will follow China's step to tighten monetary policies to prevent rapid appreciation of their currencies against the U.S. dollar.

They said the Taiwan dollar is expected to move within a narrow range of NT$30.90 to NT$31.00 against the U.S. dollar for the rest of the trading session today as market sentiment remains cautious.

Updated : 2021-10-19 11:58 GMT+08:00