The Taiwanese central bank, CBC, is set to meet for its rate decision on 21 December. According to a Scotiabank research report, the central bank is expected to keep its rate on hold at 1.375 percent given Taiwan’s benign inflation outlook, although the U.S. Fed is likely to hike its rate for the third time by 25 bps in December.
The consumer prices in Taiwan are expected to accelerate at a more rapid rate in December due to the base effect. The CBC has hiked the amount of a single 364-day NCD auction to TWD 170 billion starting from May to absorb excess onshore liquidity that has continuously pulled down the NCD auction yields.
In the meantime, the TWD has traded steadily with resilience in the past sessions, even though foreign investors have offloaded a total net USD 2.03 billion of local shares from 24 November to 6 December.
The USD/TWD pair is likely to trade higher in the coming weeks and is expected to reach the year-end forecast of 30.2 given continued equity outflows, rising geopolitical tensions on the Peninsula and the U.S. GOP tax overhaul plan, added Scotiabank.
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