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MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
TWD
USD/TWD is just below early highs from yesterday's session, sitting at 31.84 currently. We couldn't get much beyond 31.90 yesterday. Beyond the 32.00 level, the next big level on the chart is highs from late 2016, just under 32.40. The rate of ascent in USD/TWD remains very strong, see the first chart below.
- Such rapid depreciation pressures in TWD may have prompted earlier comments from the CBC Governor, which stated in the case of severe foreign outflows, the authorities could adopt FX controls.
- The CBC Governor stated the most likely scenario would be large outflows due to tighter US policy or cross-strait tensions with China. He added that outflows to date have been under control.
- Any measures would also be consistent with those used for the stock market.
Fig 1: USD/TWD Spot - 1 month Rolling Change
Source: MNI - Market News/Bloomberg
- In any event, Taiwan's external balance position still looks to be a healthy one. The country continues to run a trade surplus (averaging just under $5bn per month for the past year), FX reserves are barely off record highs as well ($545.48bn last).
- This is against a backdrop of very strong equity outflow momentum, see the chart below.
- Presumably any FX controls introduced would be in the context of market functioning rather than acute BoP pressures (outside of a conflict scenario).
Fig 2: Taiwan Net Equity Flows - 12 Month Rolling Sum (USDmn)
Source: MNI - Market News/Bloomberg
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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