As the tensions between Taiwan and China assume a new dimension, the Taiwan dollar has continued to edge lower amid the US-China stand-off. The Taiwan dollar was the worst performer today, with other Asian currencies edging lower. Also, a renewed dollar resurgence has put pressure on most other Asia units.
As of the time of writing, the Taiwan dollar is down by nearly 0.2%, nearing two-year lows. Meanwhile, investors are increasingly becoming worried over a renewed stand-off between U.S. and China following Speaker Nancy Pelosi’s recent visit to Taiwan, much to China’s chagrin.
Pelosi traveled to Taiwan on Tuesday and is billed to meet top Taiwanese government officials today. Nancy Pelosi is the highest ranking US official to visit the country in 25 years. The move has now irked China and threatens to destabilize the region as China is said to have mobilized its Airforce and navy to send a strong message to the West.
Besides its conflict with China, the island has battled stunted economic growth for some time now. Recent reports suggest that Taiwan’s manufacturing sector dwindled significantly in July.
Elsewhere, the Chinese yuan has remained largely unchanged against the dollar. Recent data show that activities in the country’s service sector have improved dramatically in July compared to last month. This is a tell-tale sign that China’s economy is recovering following protracted covid restrictions imposed to manage the pandemic.
Renewed dollar resurgence
Most Asian currencies are trading flat today, following a surprise spike in the dollar. The recent move experienced by the dollar has been attributed to hawkish comments from the Federal Reserve on inflation not being contained yet. There are now revelations that the Fed will continue its aggressive rate hikes to manage the situation.
The U.S dollar index edged higher by 1%, while the dollar index futures are up nearly 0.9%. Similarly, U.S. 10-year Treasury yields are up 7% and may rise even further today.