Taiwan Dollar Reverses Losses

The Taiwanese dollar pared its losses, appreciating around 0.7% to 32.8 per US dollar after briefly weakening past the 33 level, its weakest since April 2025. The currency initially came under pressure from a global technology selloff, which weighed on Taiwan's tech-heavy equity market and prompted foreign investors to reduce their holdings of local shares. Concerns that shifting US political priorities following the Democrats' congressional election victory could slow AI investment and hardware spending added to the selling pressure. However, exporter dollar sales and intervention by state-owned banks helped the currency recover from its intraday low. The central bank has also urged exporters to sell their US dollar holdings rather than wait for more favorable exchange rates and confirmed that it intervened in the market last month. Nevertheless, continued equity market weakness and foreign capital outflows are expected to keep the currency volatile.

The Taiwanese dollar depreciated past 32.3 per US dollar, its weakest level since early August as a sharp selloff in global semiconductor stocks weighed on regional currencies and dampened demand for technology-related assets. Taiwan’s stock market dropped more than 3%, its steepest decline since July, as concerns over elevated US interest rates, stretched valuations and the returns from massive artificial intelligence investments prompted foreign investors to pull funds from the region. Foreign investors sold a net NT$165.3 billion of Taiwanese equities on Tuesday, the third-largest daily outflow on record, with selling continuing for a sixth consecutive session on Wednesday. Hotter-than-expected US inflation data further fueled concerns over additional Federal Reserve rate hikes, adding to pressure on Asian currencies. However, falling US Treasury yields and oil prices offered some relief, while state-owned banks intervened to support liquidity in the local foreign exchange market.

The Taiwanese dollar depreciated to around 32.2 per US dollar, its weakest level since April 2025, pressured by a stronger US dollar and seasonal capital outflows. The decline erased the currency's gains from last year's rally, which was fueled by optimism over trade relations and strong technology-sector earnings. Selling pressure intensified as companies began distributing annual cash dividends, prompting foreign investors, who hold substantial stakes in Taiwanese chipmakers, to convert dividend proceeds into US dollars. This year's cash distributions are projected to exceed NT$2.5 trillion, the highest on record. Meanwhile, expectations that the Federal Reserve will keep interest rates higher for longer continued to support the US dollar, adding to downside pressure on Taiwan's currency.