USD/TWD Stabilizes After Largest Equity Outflow Since March 2022 Yesterday

USD/TWD sits slightly lower in the first part of Thursday dealing, last near 31.57. Yesterday, we printed just above 31.62 in late trade. These were fresh highs back to late Nov last year. This put us comfortably above all key EMAs, while the simple 100-day MA sits higher near 31.79.

• Sentiment in the FX space has been aided by equity stability. The Taiex is up around 0.60% in the first part of Thursday dealing. This follows fairly sharp drops in the prior 2 sessions (cumulative decline of 2.2%). TWD has lost around 2.7% YTD against the USD, although isn't the worst performer in the Asia FX space (KRW is off around 4%).
• The authorities also called for calm in FX and equity markets (see this BBG link for more details). Offshore investors sold $2616mn of local shares yesterday, the most since March 2022. For Jan as a whole, outflows are just over $4bn.
• Repricing of Fed expectations has clearly been a factor, while some carry over from weakness in China/HK stocks yesterday was also likely a weight. Officials played down any link between yesterday's outflows and the weekend election result.
• On the data front, things don't ramp back up until early next week with Dec export orders on tap.