So far Chinese devaluation is causing a rush of money out of their stock market. Getting the triple whammy of devaluation, deflating stock market and poor economy is going to suck for investors!
Is this the big one? Will the China bubble pop? Will the Taiwanese see their own bubbles deflate more rapidly?
Dunno, but it was bad yesterday and worse today in Taiwanâs stock market.
When the soup gets cold you see which noodles were made of wheat and which of rice (ç¸č˛çšďź
Not so long ago the TWD was holding its own against the USD while the majors were falling. The only reason why the TWD lost more value than I expected a year ago was because the Minister of Finance didnât stick to his commitment that Taiwan wouldnât ease. Apparently Taiwan is officially part of âGreater China,â because the TWD now mimics whatever the RMB is doing. Thus, the TWD will likely get monkey hammered some more in 1Q and maybe 2Q as well. However, this will likely not be the case in 2H 2016. Thatâs probably when those long USD will be forced to cover
The USD index is strong near 100 and will likely push a bit higher in the short term, but this will not last as the US and global economy continue to weaken. To think the FED can keep raising rates while both the global and domestic economy erode (or that the US is insulated from the global economy) is absurd. The FED gets 1 or possibly 2 more rate hikes in before theyâre forced to turn dovish and go negative rates and or QE4 before the end of this year, maybe as early as 3Q⌠and itâs possible they wonât even get that far. Bottom line - I predict the TWD will be below 33/USD a year from now and just as possible closer to 30.
What currency values do this year will depend mostly on how central banks respond to the recession. No sizable economy will escape the global downturn. As the gigantic global debt bubble unwinds, central banks will be scrambling to put a floor under asset prices. Eventually a reset starts to become more likely. For the time being, some CBs will go more nuclear than others, and that will largely determine the exchange rates.
Did you notice youâve been changing your story constantly on here as reality doesnât meet fantasy?
The global economy doesnât âbreakâ , some places boom, others bust, others muddle along at any given time.
Which country has a stronger financial and political and demographic position, Taiwan or the US? Which is generally
On the up and which isnât? you are crazy to think it could go to 30:1.
[quote=âheadhonchoIIâ]Massive headwinds against TWD due to the gorilla in the room, China, devaluing their currency (I think the speed of devaluation is a surprise) and having a shaky stick market and economy. I see euro strengthening more against the TWD. Remember the historical trading range against the euro above!
But one thing to be aware of is twd usually strengthens a bit around CNY as companies repatriate money to pay bonuses and need to convert into TWD.[/quote]
So we are in agreement now about China devaluing (continuing to do so) and the TWD going down as China does so?
I certainly donât like the TWD losing value compared to the USD because I do send money home but I spend a vast majority of my money in Taiwan or in East Asia (hit significantly harder for the most part) so the end result doesnât affect me as much.
I donât think this spells doom and gloom for Taiwan though. The US economy is still really strong (compared to the world) and the EU was due for a significant bounceback since there has been relatively little terrible economic news in the last few months.
[quote=âheadhonchoIIâ]Did you notice youâve been changing your story constantly on here as reality doesnât meet fantasy?
[/quote]
Care to give an example how Iâm constantly changing my story? :loco:
[quote]The global economy doesnât âbreakâ , some places boom, others bust, others muddle along at any given time.
[/quote]
[quote=âheadhonchoIIâ]Did you notice youâve been changing your story constantly on here as reality doesnât meet fantasy?
The global economy doesnât âbreakâ , some places boom, others bust, others muddle along at any given time.
Which country has a stronger financial and political and demographic position, Taiwan or the US? Which is generally
On the up and which isnât? you are crazy to think it could go to 30:1.[/quote]
The US dollar is going to be the king of all currencies in 2016. Weâll be lucky if the 35.5 level holds on the TWD. There is a massive deflationary credit crisis coming to a China near you. Yeah, we might not be part of China, but weâre an appendage. Wait for the bullish consolidation to complete on the USD index, then itâs lift-off to 120 on the USD index, sub-par on the Euro, and 35.5+ on the TWD. Capital will flow out of Asia faster than in 1997/8. Best be warned.
Disclaimer: I am massively LONG the USD via long-dated derivatives contracts
The USD should continue to do well in the coming months / year and since China looks as sick as it has in a long time I donât imagine that the NT will be able to hold these levels, but at some point the party has to end. I suppose if somebody did have the stomach for volatility and had a long term time horizon, things are looking topâish / bottomâish for a short USD long oil high risk pairs trade. The two have been feeding off each other for a long time now.
New Taiwan Dollar doesnât look good this year. Gonna make traveling more expensive.
Goldman Cut Won, Taiwan Dollar Forecast On Weaker Yuan
blogs.barrons.com/asiastocks/201 ⌠aker-yuan/
Today, the bank cut its Korean won and new Taiwan dollar forecast. The bank now sees the won to reach 1,250 and 1,280 in 3- and 6-month horizon, from 1,200 and 1,230 before, and the new Taiwan dollar to hit 34 and 34.5 versus 33 and 33.5 previously. This year, the won and new Taiwan dollar already fell 3.2% and 1.7%, to 1,205 and 33.4.
[quote=âheadhonchoIIâ]Not sure if you get get it. Taiwan or some Micky
Mouse country can devalue their currency by a large amount and nobody really cares. If China devalues by a lot it causes massive earthquakes everywhere some of which can come back and destroy themselves. Chinaâs major export markets include both emerging and developed economies plus when they devalue they can cause capital flight internally
And make it hard to pay off foreign denominated debt and hard to pay
For things like iPhones and oil and steel and milk and the list goes on.[/quote]
Letâs see how the devaluation works out for them. So far itâs as I predicted, stock markets are shaky worldwide and hot money is leaving China.
Taiwan dollar made a small comeback. 1 USD to 33 ntd. What happened?
US dollar made a low before its âblast offâ to 35.
We should see 35 before end of May 2016.
The NT dollar usually grows stronger in the weeks following Chinese New Year as people spend their bonuses and hongbao.
So if you need to exchange money or send money back home, after CNY is probably the best time to do it.
TWD is collapsing just as predicted. Great work guys 
Uh, itâs 32.766.
I heard the CBC lowered the interest rate by 0.125% on Thursday.
Maybe that caused the NT to collapse from 32.625 to 32.726 yesterday.
Time to tighten my belt before my pants collapse.
A 10% drop over multiple years against the strongest currency in the world is not a collapse.
[quote=âRockOnâ]
I am massively LONG the USD via long-dated derivatives contracts[/quote]
Rest in peace