The Taiwan dollar weakened on Friday as foreign investors sustained net selling of local equities for a fourth consecutive trading session, according to two traders who asked not to be named. Market intervention by state-owned banks and dollar sales from some exporters limited the extent of the decline.
USD/TWD closed up 0.1% at 31.860, after earlier in the session briefly rising as much as 0.3%. For the week, the pair recorded a 0.9% increase.
Two traders, speaking on condition of anonymity because they were not authorised to comment publicly, said foreign investors maintained significant outflows from Taiwanese stocks on Friday. The continued selling pressure in equities was linked by market participants to the move weaker in the currency.
State-owned banks were active in the foreign exchange market during the session, selling U.S. dollars and stepping up their dollar sales toward the market close, the traders said. Those operations provided support for the Taiwan dollar and helped prevent a larger depreciation.
In addition to official-sector intervention, some exporters were reported to have sold U.S. dollars around the 31.9 level, which added to demand for the Taiwan dollar and further underpinned the currency, one of the traders added.
Overall, the combination of continued foreign investor outflows, state-owned bank intervention, and exporter dollar sales shaped trading in the USD/TWD market on Friday, producing a modest daily advance for the dollar and a near 1% weekly rise.
Market context
- Foreign investor selling in Taiwanese equities continued for a fourth straight session, keeping pressure on the local currency.
- State-owned banks intervened by selling U.S. dollars during the session and increased these sales toward the close, which limited the Taiwan dollar's fall.
- Some exporters contributed to dollar selling around the 31.9 level, providing additional support to the Taiwan dollar.
Data point: USD/TWD closed at 31.860, up 0.1% on the day and up 0.9% for the week.