New Taiwan Dollar breaks multiple resistance levels, foreign capital withdrawal intensifies depreciation—The key to the future market depends on capital flow

Taiwan’s stock and foreign exchange markets both face downward pressure. Amid ongoing foreign capital withdrawals, the New Taiwan Dollar (NTD) against the US dollar briefly broke below the 31.5 mark during trading, closing at 31.475, a single-day depreciation of 9.5 cents, hitting a nearly seven-month low. Daily trading volume expanded to 20.56 billion USD. Simultaneously, the Taiwan stock market also struggled under selling pressure, plunging over 500 points at one point during the session and closing down 330 points.

Foreign Capital Withdrawal as Main Cause; Short-term Weakness Difficult to Change

The NTD opened flat at 31.38 and immediately weakened. It closed at 31.485 at midday, with the decline widening in the afternoon. Forex analysts pointed out that the fundamental driver behind the synchronized decline in stocks and forex is the large-scale exit of foreign capital. Following a net sell of 48.9 billion TWD in Taiwan stocks on the previous trading day, foreign selling continued, increasing demand for USD and putting pressure on the NTD.

Forex expert Li Qizhan believes that after losing the 31.5 support level, the NTD will likely remain volatile and weak in the short term. If Taiwan stocks drop more than 500 points again tomorrow, the depreciation pressure in the forex market could intensify further, possibly approaching the 31.6 level. Bank officials expect that the NTD still has room to depreciate before the end of the year, but the 31.5 range remains within the central bank’s tolerance zone and is also a level relatively acceptable to exporters.

Multiple Negative Factors Overlap; Regional Currencies Also Under Pressure

The factors pushing the NTD depreciation are not limited to local foreign capital withdrawals. Uncertainty in international markets also weighs on the NTD’s performance. Concerns about the outlook of the AI industry have increased, leading to sharp fluctuations in US tech stocks, which in turn impact Taiwan’s tech heavyweight stocks. As Christmas holidays approach, foreign investors are gradually entering holiday cycles, and their portfolio adjustments and capital withdrawals are intensifying. As long as foreign capital continues to exit Taiwan stocks, the NTD will face constraints on depreciation.

Regionally, Taiwan’s predicament is not isolated. The Korean won against the dollar has been declining more sharply since December, approaching the 1500 mark, with monthly declines possibly reaching the highest since the 2008 financial crisis, prompting South Korea’s government to hold an emergency meeting to formulate responses. The US dollar index slightly retreated to around 98.2 today, while the RMB midpoint rate edged slightly higher.

Future Market Focus: US Economic Data and Global Capital Flows

Looking ahead, market attention will focus on upcoming US economic data releases, which will serve as important references for the Federal Reserve’s assessment of the possibility of interest rate cuts next year, directly influencing global capital flows and forex trends. Over the past two trading days, Taiwan stocks have declined by more than 660 points, and the simultaneous bottoming out of stocks and forex has heightened market caution. Investors’ uncertainty about the future performance of the US economy has increased, and in the short term, the NTD will continue to face a weak trend.