Curbs Partially Eased, Foreign Outflows Hurt TWD

Taiwan dollar is weaker again on Friday as risk assets fall out of favour, USD/TWD is up 0.028 at 28.035 having seen its first close above the 28.00 handle yesterday since April 23. The decline comes the government makes the decision to extend the soft lockdown until July 26 from the previous July 12 deadline, while partially easing curbs as case numbers decline. Taiwan reported 18 new domestic cases of COVID-19 and three imported cases on Thursday.

• Some of the decline was attributed to heavy foreign outflows, yesterday there was chatter that state-backed banks and exporters were selling USD to absorb greenback demand from foreign investors.
• Elsewhere the Taiex index is under pressure today, down over 1% at the time of writing. The semiconductor sector is leading the way lower, TSMC are to report June sales figures today, consensus is for sales of TWD 371.1bn in the quarter to June with April and May sales some TWD 223.7bn combined. There was a Fitch report doing the rounds yesterday that the US governments move to tackle global chip shortages will benefit semiconductor firms such as TSMC. The company has already announced a $12bn plan to build a 5-nanometer plant in Arizona, with media reports saying it is mulling up to five additional plants.