Asian Stocks Plunge, Hot Money Flees: Taiwan Dollar Tumbles 1.05 Cents to Close at 31.58

(Central News Agency, reporter Pan Ziyu, Taipei, 8th) Following a sharp decline in US stocks, fears that the AI boom may be ending spread, leading to a broad sell-off in Asian markets on Monday. Taiwan's stock market recorded its largest intraday drop in history. The New Taiwan dollar also fell sharply against the US dollar, briefly breaching the 31.6 level before closing at 31.58, a significant drop of 10.5 cents, marking a new half-month low. Total trading volume in the Taipei and Yuanta foreign exchange markets surged to a massive US$3.062 billion.

Stronger-than-expected US non-farm payroll data for May dampened hopes for a Federal Reserve rate cut. This, combined with Broadcom's disappointing financial forecast and concerns over a capital squeeze from SpaceX's IPO, dragged US stocks down sharply on the 5th, leading to a "Black Monday" for Asian markets on the 8th.

Taiwan's stock market plunged 2,694 points in early trading, setting a new record for the largest intraday point drop. The losses later narrowed, with the market closing at 43,502.78 points, down 1,568.16 points. While it managed to hold above its monthly moving average of around 43,116 points, it was still the third-largest point drop on record for a closing session.

Amid the stock market rout, foreign investors sold a massive NT$93.851 billion in Taiwanese equities and aggressively repatriated funds from the forex market. The New Taiwan dollar opened at 31.51 and depreciated rapidly, hitting a low of 31.648, a drop of 17.3 cents. However, the losses moderated in the afternoon, and the currency closed at 31.58, defending the 31.5 level. The day's depreciation was 0.33%.

Forex traders noted that the Taiwan dollar faced multiple depreciation pressures on Monday. Besides the stock market crash and massive foreign capital outflows, renewed tensions in the Middle East and rising expectations of a delayed Fed rate cut strengthened the US dollar, putting pressure on Asian currencies.

However, traders pointed out that as the Taiwan dollar weakened, exporters rushed to sell dollars, which helped stem the decline and allowed the currency to recover the 31.5 level. The central bank also stepped in with intervention to smooth market volatility.

Despite the "Black Monday" for Asian stocks, forex traders believe that Taiwan's market has been relatively resilient compared to Japan and South Korea, as it managed to hold its monthly moving average. They suggested the market is not as panicked as feared. The key focus now is on tonight's performance of US stocks to see if investor panic has subsided. If the pessimistic sentiment fades and foreign capital outflows ease, the Taiwan dollar could shift from a sharp depreciation to a range-bound, slightly weaker pattern. (Editor: Yang Lanxuan) 1150608