New Taiwan Dollar: Foreign Outflows Pressure Currency — OCBC Bank

OCBC Bank strategists Shen Maoxiong and Christopher Wong's latest view indicates that the New Taiwan Dollar is facing significant foreign outflow pressure. Amid substantial capital withdrawals from the local stock market, the New Taiwan Dollar's exchange rate against the US dollar has widened its decline, partially giving back earlier gains during the Asian trading session. This trend contrasts with the previous situation where sustained foreign inflows supported the New Taiwan Dollar.

**Foreign Flow Reversal Pressures Exchange Rate**

Recent foreign capital dynamics have shown a clear turning point. Previously, supported by a strong Taiwan stock market and solid tech export performance, foreign portfolio inflows had driven the New Taiwan Dollar to strengthen against the US dollar. However, the current reversal in capital flows has become a major drag on the New Taiwan Dollar. The strategists noted that large-scale foreign outflows from the stock market have directly widened the New Taiwan Dollar's decline, reflecting rapid shifts in market sentiment and liquidity conditions.

**Central Bank Intervention Expectations Rise**

Facing depreciation pressure on the New Taiwan Dollar, market chatter has emerged that Taiwan's central bank leans toward preventing further depreciation of the local currency. OCBC Bank strategists mentioned this market rumor in their report, suggesting that monetary authorities may not stand idly by amid the rapid currency decline. If the central bank releases clear stabilization signals or takes concrete action, it could provide some support for the sharply falling New Taiwan Dollar in the short term, but the subsequent trajectory remains highly dependent on foreign capital flows and global market risk appetite.