Taiwanese Dollar Falls Despite Rising Inflation
The Taiwanese dollar fell on Tuesday in spite of accelerating inflation. In May, Taiwan's consumer price index rose 1.7%, up from 1.4% recorded in April. The May inflation rate was widely predicted, however. The accelerating inflation should put more pressure on the Taiwanese central bank to start raising its interest rates.
Already there are rumors circulating that many Asian central banks will start increasing their interest rates soon. Since many developed economies are still struggling to place their economic recovery on a firm foothold, the overall economic environment should favor the Taiwanese dollar.
This does not seem to be the case, however, at least not today. In spite of growing signs that the Taiwanese interest rates will start to rise soon, the Taiwan dollar lost some of its value against the U.S. dollar and the euro. At around 1:30 pm GMT, the U.S. dollar stood around 28.7650, or 0.21% above yesterday's close. At the same time, the euro rose 0.56% to 42.0761.
Traders who believe the Taiwanese economy will continue to outperform that of Western developed nations will be interested in the iShares MSCI Taiwan Index Fund (NYSE: EWT) and the IQ Taiwan Small Cap ETF (NYSE: TWON).
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