Taiwan dollar breaks 32 as foreign buying and MSCI reweighting lift demand
The Taiwan dollar strengthened past the 32-per-U.S.-dollar mark, with USDTWD at 31.991 at press time, as overseas investors extended their buying streak in Taiwanese equities and MSCI raised Taiwan’s weighting across three major indexes. Data from Taiwan’s stock market showed foreign investors were net buyers for four straight trading sessions from Aug. 10 to Aug. 13, with cumulative net purchases of NT$160.786 billion over the period and NT$187.455 billion so far in August. MSCI’s latest quarterly review lifted Taiwan’s weight in the MSCI Global Standard Indexes, the MSCI Emerging Markets Index, and the MSCI AC Asia ex Japan Index. In the MSCI Emerging Markets Index alone, Taiwan’s weighting rose from 26.60% to 26.85%, a 0.25 percentage-point increase, setting up passive fund rebalancing flows ahead of the effective date. Bloomberg, citing DTCC-compiled data, also reported a shift in derivatives positioning. Traders built large U.S. dollar-Taiwan dollar put option positions, pushing July notional derivatives turnover to nearly $8 billion. It was the first month this year in which put volume exceeded call volume. Citigroup said some client trades were targeting 31.5, while broader support also came from Asian central bank intervention and expectations that the Federal Reserve would pause rate hikes.
