GDP Figures Anticipated

USD/TWD has risen through the session on Friday last at 28.036, the pair closed at 28.222 yesterday – failing to clinch a close under 28.00 as risk off sentiment saw the Taiex slump 1.8% and TWD offered. USD/TWD has declined just shy of 1% in January.

• Minutes of the CBRC's December meeting were released after market yesterday. The board members emphasised that monetary policy would be on hold for now, with a further cut unlikely and no room to raise rates with a strong TWD.
• It is also worth noting that the central bank's exchange-rate policy states any move which puts the currency a minimum of 5% from the nominal effective exchange rate's 36-month moving average puts the TWD outside of a stable range. The moves in NEER have not been as dramatic as USD/TWD so while the central bank isn't necessarily comfortable at these levels, so further downside could be on the cards.
• Foreigners sold Taiwanese equities heavily yesterday, dropping $1.289bn worth of securities. Selling in January has been heavy, totalling $2.12bn in January vs purchases of $2.28bn in December.
• Market will look ahead to GDP data due at 0800GMT/1600HKT. The Taiwanese economy is expected to have grown 3.6% in Q4 and 2.55% in 2020 overall. This would be the first time in 30 years that Taiwan has grown faster than China (who posted growth of 2.3%), the success of Taiwan is attributed to swift decisive action over the pandemic and the strong performance of electronics exports.