Foreign Outflows Put Taiwan Dollar on Course to Test NT$32 Next Week

The Taiwan dollar has come under heavy depreciation pressure against the U.S. dollar as foreign investors take profits on Taiwanese stocks and continue to move funds offshore. The pressure has intensified during the peak dividend-payment season for Taiwan-listed companies, with foreign investors repatriating large amounts of dividend income and pushing the currency close to the NT$32 threshold. These flows are affecting financial-market liquidity as well as exporters’ foreign-exchange gains, losses and conversion strategies, making them a key gauge of capital outflows and the outlook for Taiwanese equities.

Central Bank Governor Yang Chin-long recently confirmed that foreign investors have been repatriating profits from Taiwanese stocks, causing the Taiwan dollar to formally weaken past NT$32 per U.S. dollar this week. Although exporters provided some support by actively selling U.S. dollars at weaker Taiwan-dollar levels, the established downtrend has prompted some to hold on to their dollars. Foreign-exchange bankers expect the currency to trade in a range of NT$31.7 to NT$32.1 next week unless a powerful catalyst triggers a near-term reversal.