U.S. Inflation Concerns Resurface + Dollar Rebounds: NT Dollar Closes Above 30, Weekly Depreciation of 1.55 Cents
Recent U.S. economic data has been volatile, leading to more conservative market expectations for aggressive Fed rate cuts. The U.S. dollar shifted from depreciation to appreciation, causing the New Taiwan Dollar (NTD) to open lower today (8/15). Exporters, seeing the exchange rate above 30 again, actively sold USD. In the afternoon, foreign capital inflows briefly pushed the rate up to 29.965, but with continued selling pressure from exporters and central bank liquidity adjustments, it ultimately closed at 30.01, down 0.022 NTD—marking the return of the "30-level" after three days. Total trading volume expanded to $1.516 billion.
This week, markets focused on U.S. July CPI and PPI data. Initially, CPI met expectations, and Treasury Secretary Beshent urged the Fed to cut rates by 50bps in September, boosting optimism for aggressive easing. However, after PPI data was released, concerns about stagflation emerged, though a 25bps cut is still expected. The dollar index fell from 98.5 to 97.6 before rebounding near 98, while the NTD fluctuated accordingly, depreciating 1.55 cents weekly and turning negative again.
FX analysts noted that rising service and goods costs in the PPI report, coupled with soft employment data and renewed inflation pressures, dampened expectations for deep Fed cuts. U.S. stocks fell while the dollar rebounded. The NTD opened weaker, hitting a low of 30.064, before exporter USD sales and afternoon foreign inflows pushed it to 29.965. Amid tug-of-war flows and central bank intervention, it still closed above 30.
Analysts added that while Taiwan stocks posted weekly gains, the rise narrowed from last week. Reduced foreign inflows and global market pressures kept the NTD weak, lacking clear direction in the short term as it consolidates between 29.99-30. Next week, with no major U.S. data due, markets will focus on Fed Chair Powell's Jackson Hole speech for potential rate cut signals.
