Playing Catch Up With CNH & KRW

Like elsewhere in North East Asia, USD/TWD is testing downside support at the 20 day MA point, 31.476 versus current spot of 31.514. For the 1 month NDF we are already through this equivalent level, current 31.407, versus 31.442 for the 20-day MA.

• We might expect some support for the pair just under 31.40, beyond that is the 31.15/20 region. On the topside, selling interest may emerge around 31.65, while above that is 31.90, which marked recent highs.
• The currency is benefiting from the equity rebound, with the TWSE up more than 4% from recent lows. The last two sessions have seen positive inflows from offshore investors, but we still remain at -$100mn in terms of monthly flows to date.
• After nearly $6bn in net outflows last month though, any stability is likely to be welcomed though.
• CBC continued to intervene in FX markets last month. Headline reserves were down to $541.11bn, from $545.48bn in August. This is a meaningful drop, but less so compared to economies like South Korea.
• Coming up later today is September inflation data. Overall trends are likely to remain fairly benign, headline expected at 2.80% y/y versus 2.66% previously, while core is forecast at 2.60% from 2.73%.