- Urges market commentators not to speculate on Taiwan dollar situation
- Urges companies not to listen to untrue analysis, sell US dollar positions
- Taiwan does not manipulate exchange rate
- Volatility of Taiwan dollar against US dollar has spiked
- That as foreign fund inflows to Taiwan stocks and firms’ expectations of currency appreciating
- Central bank not involved in tariff talks, meaning no discussion on exchange rate
From earlier: Surging TWD fuelling revaluation talk | MUFG on the Taiwan dollar move a “19-standard-deviation event”
There’s no doubt that it was a rather outsized move and the fact that the central bank did not come in to support the market earlier fueled intense speculation that a currency revaluation is part of trade talks. The Taiwan central bank is also out saying that they are not involved in tariff talks and that there has been no discussion on the exchange rate.
The worrying part of this now is that what does this actually mean for domestic players? Exporters and life insurance firms are being caught out here as they are underhedged. The latter due to their exposure in US bonds naturally.
It’s going to be an interesting next few days at least.
This article was written by Justin Low at www.forexlive.com.
