New Taiwan Dollar breaks through the 31.5 mark: Behind the scenes — foreign capital withdrawal accelerates, and depreciation may actually benefit exporters?

Taipei stock and foreign exchange markets once again moved downward in sync today, creating key points for market observation. Among them, the New Taiwan Dollar (NTD) against the US dollar directly broke through the psychological level of 31.5, closing at 31.475, a single-day depreciation of 9.5 cents, hitting a new low in nearly seven months. At the same time, the Taiwan stock market experienced a decline of over 500 points intraday, ending the session down 330 points. The dual-market sell-off pattern is clearly visible, with daily forex trading volume expanding to $20.56 billion.

Foreign capital withdrawal triggers dual sell-off, NTD depreciation pressure remains unresolved

The NTD opened today at 31.38 and immediately weakened, mainly driven by large-scale foreign selling of stocks and the resulting demand for USD purchases. Although exporters took the opportunity to sell NTD for USD during intraday trading, they could not resist the ongoing massive capital outflows. Forex analyst Li Qizhan pointed out that the strength of foreign capital withdrawal is the core reason for the simultaneous decline of stocks and forex markets. On the previous trading day, foreign investors sold nearly NT$48.9 billion worth of Taiwan stocks, and the selling pressure today remains fierce, making it difficult to halt the NTD’s depreciation.

Short-term volatility is inevitable, but depreciation may bring opportunities for export industries

Forex officials analyze that after losing the 31.5 level, the NTD will enter a volatile and weaker trading pattern. If Taiwan stocks plunge again by more than 500 points tomorrow, the pressure on the exchange rate could further intensify, possibly testing the 31.6 level. However, it is worth noting that the current 31.5 level is not only a relatively satisfactory level for exporters but also falls within the central bank’s acceptable range, indicating that the market has its own internal balancing mechanism.

The positive effects of NTD depreciation are also worth attention. For Taiwan’s export-oriented industries, a weaker NTD can actually enhance international competitiveness, benefiting exporters’ profit margins. Tourism industry players may also benefit from the increased attractiveness brought by NTD depreciation, as the cost for foreign tourists visiting Taiwan decreases, potentially increasing the number of visitors.

Global uncertainties intensify, Asian currencies generally under pressure

The recent pressure on the NTD is not an isolated phenomenon. Increasing global market uncertainties, especially concerns about the prospects of the artificial intelligence industry, have led to sharp fluctuations in US tech stocks, which in turn impact related Taiwanese industries. Additionally, with the year-end holidays approaching, foreign capital is gradually entering holiday mode, and their withdrawal of funds and portfolio adjustments are expected to intensify. As long as foreign investors continue to withdraw from Taiwan stocks, the NTD will find it difficult to escape depreciation.

Regionally, major Asian currencies are also under significant pressure. The Korean won has depreciated against the dollar since December, approaching the psychological level of 1500 won, with monthly declines possibly reaching the most severe levels since the 2008 financial crisis, prompting South Korea’s government to convene emergency meetings to formulate response measures. Today, the US dollar index slightly softened to around 98.2, while the RMB midpoint rate showed a slight increase.

Focus shifts to US economic data, capital flow becomes a decisive factor

Looking ahead, market attention has clearly shifted to upcoming US economic data releases. These data will directly influence the Federal Reserve’s judgment on interest rate cuts next year, thereby affecting global capital flow trends. Taiwan stocks have declined over 660 points in the past two trading days, with stocks and forex markets bottoming out simultaneously, and market sentiment turning more cautious. The NTD still has room to depreciate before the end of the year, but the 31.5 level has become a key support and resistance turning point. The subsequent trend will depend on foreign capital movements and international economic data performance.