Bloomberg
The New Taiwan dollar, which is on track for its first quarterly gain in a year, may face renewed pressure as the US currency strengthens and local companies boost dividend payouts to a record.Domestic firms are set to pay out more than NT$2.5 trillion (US$78.5 billion) in cash dividends this year, according to data from the Taiwan Stock Exchange, the largest amount ever in Bloomberg-compiled data going back to 1990. Foreign-exchange conversions by overseas investors repatriating the funds are expected to add to near-term volatility in the local currency.“The Taiwan dollar could hit a rough patch in the coming weeks, with a move toward the 32-per-dollar area seen as a near-term resistance zone,” Oversea-Chinese Banking Corp strategist Christopher Wong (黃經隆) said in Singapore. “Its weakness would be more likely if Fed rhetoric remains hawkish, dollar pressure builds, and dividend-related concerns become more prominent.”
New Taiwan dollar and US dollar banknotes are pictured in Taipei on Nov. 17 last year.
The NT dollar gained 0.45 percent in the second quarter to close at 31.837 per US dollar yesterday.The local currency faces a key test as Taiwan enters its peak dividend season this month. Heavy foreign ownership of the island’s semiconductor sector is likely to amplify US dollar conversions, weighing on the local currency.
