Taiwan dollar leads Asia FX rally
The Taiwan dollar rose to as high as 29.164 per US dollar after sinking 2.5% in the previous session. The central bank aggressively intervened in the currency markets right at the end of the first half of the year, three traders told Reuters on Monday.
Shares in Taipei climbed more than 2% to their highest level since March 7.
Analysts attributed the Taiwan dollar's rebound to investors correcting its month-end weakness on Monday.
Substantial hedging needs from low ratios, exporters' forex conversions, and equity-related inflows continue to fuel the rally, said Fiona Lim, a senior forex strategist at Maybank Singapore.
The US dollar edged lower as uncertainty over the Senate's push to pass President Donald Trump's fiscal and spending plan weighed on sentiment, driving investors to diversify amid internal party splits.
Trump's recent criticism of the Federal Reserve and its chief, Jerome Powell, added pressure on the dollar, fuelling worries about the US central bank's independence and credibility.
Dollar weakness lifted Asian currencies, with the Malaysian ringgit up 0.5% at its highest level since October 2. The Philippine peso inched up 0.1%, while the Indonesian rupiah added 0.3%.
Meanwhile, the Singapore dollar was hovering near its highest level since October 2014. With the July 9 US tariff deadline approaching, investors are bracing for fallout as trade talks with its partners yield little progress.
'Overall, Asian currencies could continue to climb in the backdrop of Fed cuts, benign oil prices, USD, and a stable China (improving June PMIs),' Lim added.
Stock markets in the region advanced, with South Korean equities up 1.4%. Shares of chipmaker Samsung Electronics rose 1.3%, while battery maker LG Energy Solution added 0.3%.
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