Taipei: The U.S. dollar surged against the Taiwan dollar on Monday, reaching its highest level since May 22. This rise was driven by a massive outflow of funds from Taiwan, as investors reacted to turmoil in global equity markets.
According to Focus Taiwan, the U.S. dollar closed at NT$31.580, surpassing the previous record of NT$31.568 from May 22. Throughout the trading day, the greenback fluctuated between NT$31.500 and NT$31.648, with a combined turnover of US$3.062 billion across the Taipei Foreign Exchange and the Cosmos Foreign Exchange.
The U.S. dollar experienced a significant boost in the morning session, increasing by as much as NT$0.173. This was a time when other Asian currencies were also under pressure. However, Taiwanese exporters began exchanging their U.S. dollars for Taiwan dollars, which helped the local currency recover some of its losses. Additionally, the local central bank intervened by selling the U.S. dollar and buying the Taiwan dollar to limit the greenback's gains.
Movements in Taiwan's stock market further fueled demand for the U.S. dollar. Foreign institutional investors sold a net NT$93.85 billion in shares on Monday. The Taiwan Stock Exchange's benchmark index, the Taiex, experienced a sharp drop, plunging 2,694 points at one stage before recovering to close down 1,568.16 points, or 3.48 percent, at 43,502.78.
The sell-off was attributed to foreign institutional investors withdrawing funds from Taiwan to meet redemption needs in the United States following heavy losses on Friday. This increased demand for the U.S. dollar, driving its value higher against the Taiwan dollar.