New Taiwan Dollar Quarterly Line Ends 3 Consecutive Declines; July Dividend Outflows May Lead to a Battle to Defend the 31 Mark

(CNA) Artificial intelligence (AI) themes are red-hot, leading the Taiwan stock market to set multiple unprecedented bull market records. The second quarter saw a surge of 14,402 points, the largest single-quarter point increase in history. Although recent outflows of hot money have brought depreciation pressure, month-end exporter remittances provided support. The New Taiwan Dollar closed at 31.837 against the US Dollar today, a slight appreciation of 0.8 cents. The monthly line closed lower, but the quarterly line successfully turned upward, ending three consecutive declines.

In June, influenced by factors such as the international stock market's pullback and hawkish signals from the US Federal Reserve (Fed), foreign investors sold off Taiwanese stocks at a record pace and frantically remitted funds abroad, causing significant fluctuations in both stocks and currency. The New Taiwan Dollar exchange rate experienced a sharp decline. It was around 31.3 at the beginning of the month, and by the last few trading days of the month, it broke below 31.9 in intraday trading, approaching the 32.0 mark.

Foreign investors continued their remittance trend this morning, but the momentum had clearly weakened. After opening at 31.82 against the US Dollar, the New Taiwan Dollar quickly weakened, reaching an intraday low of 31.93, but did not break further down. Subsequently, exporters heavily sold US dollars above 31.900, and some foreign investors also remitted funds in. The afternoon saw a rapid recovery of losses, and with the central bank's intervention at the end of trading, the exchange rate turned from depreciation to appreciation, closing with a slight gain. The total transaction volume in the Taipei and Yuan Tai foreign exchange markets was US$2.612 billion.

Forex traders stated that the strong performance of the Taiwan stock market today, with a gain of over a thousand points, provided strong support for the New Taiwan Dollar. Foreign investors only sold Taiwanese stocks slightly, and some foreign investors were seen remitting funds back in the afternoon, all of which helped to ease the depreciation pressure on the New Taiwan Dollar.

The New Taiwan Dollar closed its monthly and quarterly lines against the US Dollar today. In June, it depreciated by 4.53角 (0.453 NTD) or 1.42%, with the monthly line closing lower. The cumulative appreciation for the second quarter was 1.43角 (0.143 NTD) or 0.45%, ending three consecutive declines.

Since the first half of this year, the outbreak of US-Iran conflict initially led to a surge in safe-haven demand for the US Dollar. Subsequently, hawkish signals from the US Federal Reserve strengthened the US Dollar. During this period, market concerns about an AI bubble also caused disruptions, with fluctuating news. This led to volatile movements in the New Taiwan Dollar exchange rate, with a cumulative depreciation of 3.99角 (0.399 NTD) in the first half of the year.

Although the New Taiwan Dollar trended upward in the second quarter, forex traders pointed out that the market's growing expectation of Fed rate hikes, the persistently strong US Dollar index, and the upcoming peak season for foreign investor dividend remittances in July all pose challenges for the future trend of the New Taiwan Dollar. The battle to defend the 31 mark may continue. (Editor: Yang Kai-hsiang) 1150630

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