On March 4, 2025, the Taiwanese stock market suffered significant losses, closing down 159 points, primarily due to the impact of declining U.S. technology stocks. The New Taiwan dollar (NTD) initially fell to 32.976 against the U.S. dollar at one point during trading. Despite this volatile morning, the currency experienced a late recovery, finishing up 0.4 points to close at 32.913, which ended two consecutive days of depreciation.
The foreign exchange market saw considerable activity, with total trading volumes climbing to 20.325 billion U.S. dollars, marking over 20 billion for two consecutive days. Forex traders indicated heavy selling by foreign investors, who offloaded over 500 billion Taiwan dollars, contributing to the pressure on the NTD. Nonetheless, as trading continued past noon, the intensity of dollar selling eased, partly due to exporters selling U.S. dollars, which helped stabilize the NTD.
The central bank's intervention was also noted, as it moved to support the currency by adjusting the exchange rate. This regulatory action, alongside exporters responding to market conditions, allowed for the NTD's turnaround from depreciation to slight appreciation by the end of the day. Market analysts remain cautious about the NTD's future performance but suggest the currency should find some support due to continued exporter actions.
According to reports, the U.S. dollar index fell by 0.7% as of 4 PM, with several major Asian currencies strengthening against it. The Japanese yen saw the largest appreciation, increasing by 0.56%, followed by the Singapore dollar and the Chinese yuan, which appreciated by 0.22% and 0.15%, respectively. Conversely, the South Korean won faced difficulties, depreciated by 1.2%, marking it as the weakest among Asian currencies.
The weakening Taiwanese stock market was also exacerbated by news from Taiwan Semiconductor Manufacturing Company (TSMC), which announced plans for significant investment of one billion U.S. dollars in the United States. This move, coupled with the resulting heavy capital reversal, has drawn considerable market attention and reacted negatively, leading to trading pressures on both the currency and stock market.
Despite these market challenges, regulatory authorities continue to express their commitment to maintaining the stability of the NTD. The central bank's recent actions have been interpreted as attempts to mitigate pressure from falling currency values, with highlights reflecting their readiness to intervene proactively where necessary.
Looking forward, experts predict the NTD may stabilize within the range of 32.5 to 33 NTD per U.S. dollar, primarily due to exporter support and continued monitoring by monetary authorities. Analysts suggest there could be repercussions from the U.S. government's scrutiny over trade surpluses and possible sanctions, which may steer Taiwan's economic strategy and currency management response.
Market participants are urged to keep close track of foreign capital flow trends, as these movements heavily dictate trading directions. With recent history marking elevated volatility, investors remain on alert, poised for swift responses to potential currency fluctuations.