Taiwan dollar falls after election; Thai baht rises most since December

The Taiwan dollar fell to more than a three-week low on Monday even as equities ticked higher after the country’s Democratic Progressive Party won the presidential election, while the Thai baht appreciated most since mid-December.

Taiwan’s currency fell about 0.3% to hit its lowest since Dec. 22 to trade at 31.235 per dollar, while its stocks rose as much as 0.6%.

The Democratic Progressive Party’s candidate Lai Ching-te won the presidency on Saturday, the third consecutive term for the DPP, but the party lost its parliamentary majority.

While Taiwan shares rose on Monday, analysts expected the market might take a hit this week following a 25% rise in just over a year, as the lack of a parliamentary majority could complicate Lai’s spending plans.

However, Citi analysts said the Taiwan dollar would likely outperform after election volatility settles.

“The market is likely to shift focus back to fundamental factors of a better semiconductor industry outlook and lower global yields, which is more likely to increase foreign flows and be supportive for TWD,” they said in a client note.

Meanwhile, the Chinese yuan was flat, after the central bank in Asia’s largest economy skipped a much-expected rate cut but added some liquidity to help the beleaguered economy.

Asian currencies: Taiwan dollar, Korean won higher

The other Asian currencies such as the Indonesian rupiah, Malaysian ringgit, Singapore dollar and the Philippines peso traded between flat and marginally lower, while the South Korean won fell about 0.4%.

The Thailand baht was a notable outlier among emerging Asian currencies, advancing as much as 0.8% to trade at 34.753 per dollar and poised for its best day since mid-December.

Bank of Thailand said that cutting interest rates would not help protect the economy against external factors in a policy review held earlier in the day, pointing towards a divergence of views between the government and the central bank.

The low-yielding baht lost about 0.6% in the previous week, after the country’s prime minister raised concerns over high interest rates and economic conditions in a meeting with the central bank governor.

Thailand’s central bank is scheduled to hold its monetary policy review on Feb 7.

It has raised rates by 200 basis points since August 2022 to temper price pressures but has held rates steady since November 2023.

Among Asian stocks, Philippines, Malaysia, Singapore and South Korea firmed between 0.1% and 0.7%.