Hot money remittances are stressful! The New Taiwan Dollar fell below 32.5 yuan and hit a new low in the band

Hot money remittances are stressful! The New Taiwan Dollar fell below 32.5 yuan and hit a new low in the band (photo by reporter Chen Meiying)

[Reporter Chen Meiying/Report from Taipei] Taiwan stocks rebounded in early trading, but foreign investors sold more than 300 billion yuan in Taiwanese stocks yesterday, hitting a record high. The New Taiwan dollar exchange rate against the US dollar continued to absorb the huge selling pressure from foreign investors. After depreciating in the morning, it continued to fall, and broke through the 32.5 yuan mark near 11 o'clock, setting a new low in the band.

Foreign investors have oversold Taiwanese stocks for seven consecutive trading days since last Tuesday. So far, the amount of overselling in the centralized market alone has exceeded NT$600 billion, exceeding the level for the whole of last year. After foreign capital oversold, large-scale remittances of hot money also put the New Taiwan dollar under heavy depreciation pressure. Although the central bank vigorously adjusted and exporters' sales volume as of this year was higher than last year, it was still difficult to meet the demand for foreign capital's remittances. As of yesterday, the exchange rate of the New Taiwan dollar depreciated by 2.56%, becoming the weakest Asian currency.

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The New Taiwan dollar exchange rate opened at 32.29 yuan this morning, depreciating 2.5 cents. As of 11 o'clock, it rose to a maximum of 32.25 yuan and dropped to a low of 32.516 yuan, depreciating 2.51 cents.

U.S. inflation picked up in September, and the market is worried that the Federal Reserve may raise interest rates again before the end of the year. The U.S. dollar and U.S. Treasury yields remain high. In addition, AI investment returns and corporate financing risks have raised concerns. Highly valued technology stocks are the first to bear the brunt. People from Huiyin pointed out that due to the high proportion of Taiwanese technology stocks, international funds regulate semiconductor and AI-related holdings, which also increases the pressure on foreign investors to oversell Taiwanese stocks. Whether the New Taiwan Dollar can stop its subsequent depreciation depends on the movement of foreign capital. However, the central bank has more than 600 billion U.S. dollars in foreign exchange reserves and has the ability to regulate the market. In addition, exporters hold a large amount of U.S. dollars and are expected to provide U.S. dollar supply when necessary. Therefore, Huiyin people believe that short-term depreciation of the New Taiwan dollar is inevitable, but with the support of the central bank's adjustment and exporters' foreign currency selling, the exchange rate should not get out of control.

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