S&P Upgrade Taiwan To AA

USD/TWD rose throughout the session yesterday, despite broad weakness in the greenback during APAC hours, with chatter of intervention by state banks at the behest of the central bank seeking to prevent a close below 28.00. Given that the US Tsy said TWD could be up to 21% undervalued the CBC could be fighting a losing battle.

• Data yesterday showed Taiwan's jobless rate saw a slight drop in March registering a jobless rate of 3.72% in March, down 0.01ptps from February. According to the Directorate-General of Budget, Accounting and Statistics (DGBAS) the rate edged down in March mainly because domestic economic activity began to recover amid easing concerns over the COVID-19 pandemic.
• On the geopolitical front, Taiwan promised to defend itself after Japanese PM Suga that there was no possibility of committing Japanese forces to help defend Taiwan. "It is an unshirkable duty for us to safeguard our own national security, and Taiwan will shoulder the responsibility by itself to protect its people's homes and defend the country," Joanne Ou, spokeswoman for Taiwan's foreign ministry, said.
• Elsewhere, S&P raised Taiwan's long-term foreign and local currency issuer credit rating to AA from AA- citing an effective response to the pandemic as well as a strong net external asset position and competitive private sector. S&P added that "Although geopolitical tension has risen, our base case remains that cross-strait and international trade relations will not fundamentally disrupt Taiwan's economic stability."
• Markets await industrial production and money supply data later in the session. The March figure is expected to rise 9.7%, after a 2.96% rise in February, the rise is expected as chip demand remains elevated which has boosted production rates. As an aside, TSMC have announced they have approved capex of $2.88bn to expand production capacity for auto chips based on rising structural demand.