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USD/TWD Cements Break Above 32.00, Equity Flows Diverge From South Korean Trends


USD/TWD is just off fresh cyclical highs above 32.16, last at 32.13. Resistance around the 32.00 level in spot has given way, although today's move in spot largely reflects catch up with the 1-month NDF, which pushed into the 32.15/20 range overnight (last 32.14). Early 2017 highs around 32.36 remain the upside target from a spot standpoint.

  • Onshore equities are trading at fresh cyclical lows, with levels last seen in late 2020 (sub 12760 for the Taiex). The onshore financial regulator is moving to boost defences (see this link for more details).
  • Offshore investors continue to unload local equities. The past month has seen close to $5bn in net outflows, see the chart below. Whilst this is away from 2022 trough points, monthly net inflow momentum has barely been positive this year.
  • Taiwan's flow picture is also underperforming South Korea by a decent margin, which may reflect Taiwan's greater exposure to tech.
  • Coming up later is September export orders. The market looks for a -5.0% y/y dip, versus +2.0% in August. The CBC Governor pointed to harder economic challenges in 2023 during a speech yesterday (see this link for more details).

Fig 1: Taiwan & South Korea Net Equity Flow Trends

Source: MNI - Market News/Bloomberg

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