OCBC strategists Sim Moh Siong and Christopher Wong highlight that Taiwan Dollar (TWD) has extended losses on heavy foreign equity outflows, partly retracing into the Asian close amid talk of CBC leaning against depreciation. They stay somewhat cautious, suggesting any sustained TWD recovery will require improved underlying flows, with CBC smoothing only likely to contain excessive volatility rather than drive a full reversal.
Cautious on Taiwan Dollar
"TWD extended its decline amid continued foreign equity outflows, though losses were partially retraced into the Asian close."
"Foreign investors sold a record TWD302.5bn of Taiwanese equities on Thursday as the global tech selloff deepened. There was market chatter of CBC leaning against the wind, potentially helping to temper the pace of depreciation into Asia close."
"We remain somewhat cautious on TWD, though tentative stabilisation in US equities overnight, alongside softer Treasury yields and USD, may offer some respite."
"Focus will be on whether foreign selling moderates after Thursday’s sharp selloff. A more sustained TWD recovery would likely require some improvement in underlying flows, while CBC smoothing may help contain excessive volatility."
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