The Taiwanese dollar plummeted to 31.475, a six-month low, as foreign investors withdraw, triggering a new wave of selling pressure.

Taipei’s financial markets today are caught in a double bind. Amid ongoing large-scale withdrawals by foreign investors, the Taiwan stock index once plunged over 500 points intraday, ending the session down 330 points; at the same time, the New Taiwan dollar (NTD) against the US dollar was also under pressure, breaking through the 31.5 mark in the afternoon to close at 31.475, a daily depreciation of 9.5 cents, marking the weakest level in nearly seven months. The foreign exchange market’s trading volume also expanded to $20.56 billion USD.

Since opening at 31.38, the New Taiwan dollar has continued to be pressured today, with dollar-buying from foreign investors following stock sales becoming the main driver. Although exporters timely sold foreign exchange to rescue themselves, they ultimately could not withstand the massive capital outflow, causing the NTD to slide toward the 31.5 support level. By midday, it closed at 31.485, with further declines in the afternoon.

The strong momentum of foreign investors is the main reason; short-term NTD consolidation is inevitable

Foreign exchange expert Li Qizhan pointed out that the root cause of the simultaneous weakening of the stock and forex markets is the significant withdrawal of foreign capital. After a large sell-off of nearly NT$48.9 billion in Taiwan stocks on the previous trading day, foreign investors continued their selling today, directly impacting the NTD’s trend. He judges that once the 31.5 integer level is broken, the NTD will likely show short-term oscillation with a downward bias. If Taiwan stocks suffer another drop of over 500 points tomorrow, the depreciation pressure on the forex market will further intensify, possibly reaching the 31.6 level.

Bank officials expect that the NTD still has room to depreciate further before the end of the year. The current level of 31.5 is considered satisfactory for exporters and also within the scope acknowledged by the central bank.

US tech stock volatility intensifies NTD pressure; international environment remains grim

Apart from foreign investment factors, uncertainties in the international market are also increasing the burden on the NTD. Concerns about the prospects of the artificial intelligence industry continue to rise, leading to sharp fluctuations in US tech stocks, which in turn affect related industries in Taiwan. Meanwhile, as Christmas approaches, foreign institutional investors are entering holiday mode, with increased pressure from capital withdrawals and position adjustments. As long as foreign investors keep exiting Taiwan stocks, the depreciation pressure on the NTD will be difficult to alleviate.

It is worth noting that other major Asian currencies are also facing difficulties. The Korean won against the dollar has accelerated its decline since December, approaching the psychological level of 1,500 won, with a monthly drop that may set a record since the 2008 global financial crisis, even prompting the South Korean government to convene emergency meetings to seek solutions. Currently, the US dollar index has slightly softened to around 98.2, while the RMB midpoint has marginally strengthened.

Focus shifts to US economic data; capital flow becomes a decisive variable

Looking ahead, market attention has turned to the upcoming US economic data releases, which will directly influence the Federal Reserve’s assessment of interest rate cuts next year and thus dominate global capital allocation. Over the past two trading days, the Taiwan stock index has fallen more than 660 points, deepening market caution as stocks and forex markets hit bottom simultaneously. Whether the NTD can hold steady depends critically on foreign investor movements and global risk appetite trends.