Consolidates Above 28.50 Amid Water Shortage

Taiwan dollar is weaker, USD/TWD consolidating further above 28.50. The pair is now above its 100-day moving average for the first time in 11 months

• Taiwan has stepped up its fight against its worst drought in decades, the government issued its first red alert on water supply in six years yesterday, warning that reservoirs in several parts of central Taiwan are running dangerously low. Authorities will cut the water supply to companies in two major science parks in Taichung by 15%. While TSMC and Micron Technology both have chip-making operations in Taichung, the restrictions are not expected to affect their production. TSMC's headquarters further north in Hsinchu have escaped further restrictions for now.
• TWD came under further pressure from equity outflows yesterday. Foreigners sold $1.179bn of domestic equities, the seventh day of selling in the past eight.