Taiwan Dollar Plummets as Fund Outflows Reach New Heights

The Taiwan dollar plummeted against the US dollar on Monday, reaching an intraday high of NT$32.49 due to large fund outflows from Taiwan. The greenback rose by NT$0.146 against the Taiwanese currency, closing at NT$32.438. Combined turnover on the Taiwan Foreign Exchange and the Cosmos Foreign Exchange totaled a significant US$3.92 billion.

Initially, the US dollar weakened against the Taiwanese dollar as the US dollar index declined. However, after dipping to its daily low, the greenback rebounded due to foreign institutional investors moving large sums of money out of Taiwan, dealers said. This movement was despite the Taiex, Taiwan's benchmark stock index, rising 266.66 points to close at 43,386.41.

Many Taiwanese exporters took advantage of the weaker Taiwanese dollar to sell US dollars, limiting the local currency's losses. Additionally, Taiwan's central bank intervened in the late trading session to smooth volatility in the Taiwanese dollar. While the US and Japan confirmed their joint efforts to boost the Japanese yen by weakening the US dollar, the Taiwanese dollar still remained weak.

Foreign institutional investors continued to sell shares in Taiwan, recording net sales of NT$19.19 billion. Dealers warned that it is possible for foreign investors to keep moving funds out of Taiwan, including cash dividend payments, which could challenge the NT$32.6 level in the short term.