CAUTIOUS:
The local currency’s stabilization has contributed to gains in financial stocks, but concerns over potential semiconductor tariffs have kept investor sentiment cautious
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Staff writer, with agencies
The New Taiwan dollar showed signs of stabilizing yesterday after a recent surge, but local shares still closed slightly lower as investors remained concerned over possible US tariffs on semiconductor imports.
The NT dollar reversed its steep rise in the previous two sessions, closing down NT$0.135, or 0.45 percent, at NT$30.280 against the US dollar in Taipei trading.
The NT dollar led volatile moves in Asia earlier this month, surging as much as 5 percent against the US dollar on Monday, its biggest single-day gain since the 1980s.
Photo: CNA
The rally was fueled by exporters rushing to convert US dollar holdings and signs that life insurers might have been hedging their greenback-denominated portfolios.
However, it edged lower yesterday amid a broader pullback in Asian currencies.
Central bank Governor Yang Chin-long (楊金龍) on Monday said that speculative activity had driven the sharp appreciation, prompting the bank to intervene early this month.
Yang attributed part of the sharp rise to analyst statements that the NT dollar might rise, calling for them to tamp down their chatter.
President William Lai (賴清德) and the Cabinet’s Office of Trade Negotiations have denied that the currency has been discussed during talks with the US, which has threatened to impose a 32 percent tariff on Taiwanese exports.
While the local currency stabilized after its sharp rally earlier this week, the TAIEX closed down 10.40 points, or 0.05 percent, at 20,522.59 yesterday, as concerns over potential US semiconductor tariffs weighed on sentiment.
After opening down 179.11 points, the market rebounded and reached its intraday high just before noon. However, selling pressure intensified later in the session, particularly in large-cap semiconductor stocks, dragging the TAIEX into negative territory by the close.
“Investors seemed relieved to some extent after the central bank, the largest player in Taiwan’s currency market, said volatility was over,” Mega International Investment Services Corp (兆豐國際投顧) analyst Alex Huang (黃國偉) said.
However, “possible tariffs on semiconductors returned to hurt sentiment. So Taiwan Semiconductor Manufacturing Co [TSMC, 台積電] came under pressure, dragging the broader market lower,” he said.
TSMC, the world’s largest contract chipmaker and also the most heavily weighted stock on the local main board, lost 1.92 percent.
However, easing concerns over the impact of currency fluctuations on insurers’ overseas assets lent support to the financial sector.
Cathay Financial Holding Co (國泰金控) rose 2.19 percent, while E.Sun Financial Holding Co (玉山金控) gained 2.69 percent. In contrast, Fubon Financial Holding Co (富邦金控) slipped 1.25 percent.
With the NT dollar’s unprecedented two-day rally subsiding, investor attention is now turning to the US Federal Reserve’s policy meeting today.
While the Fed is widely expected to keep rates unchanged, the meeting might be the last with such a clear-cut outcome.
