Foreign Investors’ Profit-Taking in Taiwan Stocks Weighs on Taiwan Dollar This Year, Central Bank Chief Says

Taiwan's central bank governor has stated that foreign investors' profit-taking in Taiwan equities has been a drag on the Taiwan dollar so far this year. The transmission mechanism runs through the capital account: when offshore holders sell local shares, they must convert the proceeds from New Taiwan dollars into foreign currency, creating net demand for U.S. dollars and downward pressure on the currency. Taiwan's stock market, which carries heavy weighting in semiconductor and technology names, is therefore the primary channel through which equity flows feed into FX, with the TWD and local equity indices most directly exposed. Traders should watch the central bank's next quarterly policy meeting and weekly foreign investor net-flow data from the Taiwan Stock Exchange for signs of whether selling is persisting or easing.

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