Latest news with #StefanAngrick
CNBC
06-05-2025
- Business
- CNBC
Taiwan dollar eases after historic surge as officials deny currency talks with U.S.
Workers at a wet market count and return New Taiwan Dollar notes to customers, as Taiwan is expected to show positive GDP and economic growth, amid the covid-19 pandemic, in Taipei, Taiwan, 15 Aug 2021. Taiwanese dollar pulled back Tuesday after a historic surge that saw it clock multi-decade gains amid speculation about pressure from Washington on strengthening the local currency. It weakened over 3% against the U.S. dollar on Tuesday, after a meteoric 9% rally over the previous two trading days to hit three-year highs, and logging its sharpest daily gains Monday since at least 1981 according to LSEG data. Despite Tuesday's weakness, the Taiwanese dollar is still up over 8% this year against the greenback, while the U.S. dollar index is down by the same year to date. "We're seeing currency moves more [volatile] than what we saw during the Asian financial crisis era," said David Chao, global market strategist at Invesco. The recent dramatic upward swings in the currency were largely driven by exporters' rush to convert U.S. dollar reserves to the local currency as the U.S. dollar faltered, and life insurers' intensified hedging for their U.S. dollar debt holdings, experts said. Taiwanese life insurers are among Asia's largest holders of U.S. bonds and have been sitting on huge, underhedged U.S. dollar exposures, according to market analysts. Investors are closely monitoring the Taiwanese central bank as its "notable absence" has fanned speculation that the authorities were tolerating a stronger currency to win trade concessions from U.S., said Stefan Angrick, Head of Japan and Frontier Market Economics at Moody's Analytics. "The central bank has been unusually hands-off amid soaring forex volumes." Governor Yang Chin-long said at a press conference Monday that Taiwan's central bank had stepped in to curb what it deemed as "excessive" inflows while refuting claims that exchange rates were part of the U.S. trade negotiation. He did not elaborate on the nature of intervention. Despite official denial, foreign exchange rates might "quietly be on the table in broader U.S.-Taiwan trade conversation," Angrick said. President Donald Trump has advocated for a weaker greenback to boost U.S. export competitiveness. Analysts are also largely skeptical of any meaningful intervention from the central bank so far. The Taiwanese dollar has already reached the upper bound of the central bank's monitoring range, Invesco's Chao said, "If the central bank continues to step back, that may be the market's cue that a quiet currency realignment is underway." Tuesday's pullback was mostly due to the returning dollar demand by importers, according to Michael Wan, FX strategist at MUFG Bank, who believes the central bank has not intervened "very aggressively." Separately, Taiwan's financial supervisory commission has reportedly held meetings with some of the island's largest insurers to assess the risks a weaker greenback poses to their U.S. bond holdings. Three insurers said their risk-based capital remains within regulatory standards, according to Taipei-based Economic Daily News. Analysts see room for further gains in Asian currencies including Taiwanese dollar, betting that Trump tariffs could backfire on the American economy and that signs of progress in U.S.-China trade talks may revive trade flows in the region, supporting demand for Asian assets. "Momentum behind TWD strength may have legs if the broader de-escalation narrative holds, [and] if tariff implication on growth proves more manageable than feared," said Christopher Wong, currency strategist at OCBC Bank. "A more market-determined TWD may be helpful during trade talks." U.S. senior officials, including Treasury Secretary Scott Bessent, have recently sounded more upbeat about the prospects for reaching a trade deal with China. Beijing last week also signaled its openness to start trade negotiation with Washington. Besides the Taiwanese dollar, other Asian currencies have also rallied in recent weeks as the U.S. dollar has faltered. Chinese offshore yuan hit a six-month high of 7.1834 against the greenback on Monday, before paring some of the gains on Tuesday. "Currencies with the largest trade surpluses are more exposed to fears of a 'Plaza Accord 2.0,' and TWD is at the top of this list," said Ju Wang, head of Greater China FX & rates at BNP Paribas. Plaza Accord refers to an agreement signed in 1985 when G5 nations agreed to depreciate the U.S. dollar against the German mark and the Japanese yen to address trade imbalances. The Taiwan dollar's sharp rally piled on some pressure on the island's export-heavy tech sector, as a stronger local currency makes goods expensive for foreign buyers, reducing its competitiveness. Taiwan Semiconductor Manufacturing Co shares fell for a second day, losing nearly 2% on Tuesday. Every one percentage point of appreciation in the Taiwanese dollar is estimated to trim TSMC's operating margin by approximately 0.4 percentage point, said Brady Wang, Associate Director at Counterpoint Research. A stronger local currency reduces the value of its U.S. dollar-quoted revenue and most of TSMC's operations are in Taiwan. The world's largest contract chipmaker gave its second-quarter earnings forecast on the assumption of a USD/TWD exchange rate of 32.5. Stock chart icon US Dollar/Taiwan Dollar FX Spot Rate "Local chip and electronics manufacturers, which earn the bulk of their revenue in U.S. dollars, will feel the pinch as those earnings translate into fewer local dollars," said Angrick. But strong global chip demand may still be able to cushion the blow, Angrick added, noting the artificial intelligence boom and the push for advanced chips will continue to make Taiwan a critical supplier with few close competitors. Many exporters also appear to be well hedged. TSMC, for example, books both revenue and costs largely in dollars, while others rely on forex contracts or price adjustment clauses, said Phelix Lee, an equity analyst covering tech firms. Taiwan Semiconductor Manufacturing Co shares fell for a second day Tuesday, losing nearly 2%, while Hon Hai Precision Industry Co gained 2.5%.
Wall Street Journal
01-05-2025
- Business
- Wall Street Journal
BOJ Rate Hike in 2025 Looks Like a Question of If, Not When
0626 GMT – A Bank of Japan rate hike in 2025 is now a question of if rather than when, Moody's Analytics' Stefan Angrick says after the central bank stood pat. The BOJ 8301 8.17%increase; green up pointing triangle cut its GDP and inflation forecasts, citing risks skewed to the downside. 'After more than a year of BOJ communication insisting that the economy is doing well and improving, despite the hard data saying the opposite, this shift in tone is notable,' the economist says. But that doesn't mean it's done hiking–inflation looks sticky, and the BOJ would keep hiking if not for extreme uncertainties around trade, he adds. Pinpointing the next move is tough: yen depreciation, rising inflation and/or improved wage growth could see another hike this year. Absent that, a hike next year or the year after seems more plausible, depending on the global trade war, he says. (
Yahoo
17-02-2025
- Business
- Yahoo
Japan 2024 growth slows despite stronger fourth quarter
Japan's economic growth slowed sharply last year, official data showed Monday, although the rate for the fourth quarter topped expectations. The figures come as Japanese companies fret over the impact of US President Donald Trump's protectionist trade policies, including import tariffs, on the world's fourth largest economy. Gross domestic product expanded 0.1 percent in 2024, well down from 1.5 percent the year before, the data showed. But the figures for October-December were brighter. Quarter-on-quarter growth accelerated to 0.7 percent, from 0.4 percent in July-September, when a "megaquake" alert and one of the fiercest typhoons in decades dampened activity. The fourth-quarter figure was also more than double market expectations of 0.3 percent growth. "On the surface, Japanese GDP growth in the final stretch of 2024 looks like a turning point," said Stefan Angrick of Moody's Analytics. "But don't break out the champagne just yet. Japan's preliminary GDP figures are notoriously choppy, and sizeable revisions are common," he warned. "The upbeat headline figure masks a domestic economy still stuck in the mud. Consumption is weak as pay gains have trailed inflation for the better part of three years," Angrick said. "And given the worsening outlook for global trade, Japan won't be able to count on exports to pick up the slack in 2025." Trump said last week that he planned to unveil tariffs on imported cars from around April 2, adding to a cascade of levies he has threatened since taking office. Ahead of the latest GDP data, the Daiwa Institute of Research said "various growth factors are seen, including normalisation of production for motor vehicles". "A strong appetite for capex spending on the part of corporations, and a comeback for inbound consumption" were also positive factors, the institute said in a report. This time last year, Germany overtook Japan as the world's third-biggest economy, with India projected to leapfrog both later this decade. The change in positions primarily reflected the sharp fall in the yen against the dollar, analysts said at the time. In January, the Bank of Japan raised interest rates again -- having done so in March for the first time in 17 years -- and signalled more hikes to come. The move, which left borrowing costs at the highest since 2008, was also underpinned by "steadily" rising wages and financial markets being "stable on the whole", the bank said. Even as other central banks raised borrowing costs in recent years the BoJ had remained an outlier. But it finally lifted rates above zero in March, signalling a move away from policies designed to counter Japan's "lost decades" of economic stagnation and static or falling prices. Capital Economics said in a note on Monday that "even though the jump in Q4 GDP wasn't broad-based, it supports our view that the Bank of Japan will tighten policy more aggressively this year than most anticipate". kh-kaf/dan Sign in to access your portfolio
