Bloomberg
The New Taiwan dollar fell to its weakest level since April last year, erasing gains from last year’s historic rally as US dollar strength and record dividend payouts weighed on sentiment.The local currency dropped as much as 0.6 percent before paring losses to close at NT$32.178 per US dollar in Taipei yesterday. The move wiped out the sharp gains from May last year, when the currency soared by the most since the 1980s on easing trade tensions and upbeat tech earnings.The NT dollar now faces a key test as Taiwan enters its peak dividend season this month, with heavy foreign ownership in the semiconductor sector likely amplifying US dollar conversions. Domestic firms are set to pay out more than NT$2.5 trillion (US$77.7 billion) in cash dividends this year, according to data from the Taiwan Stock Exchange, the largest amount in Bloomberg-compiled data going back to 1990.
New Taiwan dollar and US dollar banknotes are displayed in front of the central bank’s logo in Taipei on May 6 last year.
The risk of outflows is heightened by a less supportive global environment. The greenback’s strength on expectations that US interest rates will stay elevated for longer, combined with a rebound in oil prices due to renewed Middle East tensions, are adding to headwinds for Taiwan’s currency.“TWD weakness today is likely due to dividend payment repatriation,” Australia and New Zealand Banking Group Ltd head of Asia research Khoon Goh (吳昆) said. “Taiwan Semiconductor Manufacturing Co (台積電) paid out its quarterly dividend today, and given the large foreign holdings, those flows are weighing on TWD.”
