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TWD Sell-Off Rapid In The Past Month, CBC Warns On FX Controls If Severe Outflows Seen

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

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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

Keep reading...Show less