## New Taiwan Dollar Breaks 31.5 Level, Foreign Capital Withdrawal Intensifies Regional Currency Depreciation

Taipei foreign exchange market fell into a typical capital outflow dilemma yesterday. The New Taiwan Dollar (NTD) against the US dollar depreciated rapidly in the afternoon, breaking through the 31.5 level to 31.475, hitting a nearly seven-month low, with a single-day decline of 9.5 cents. Meanwhile, the Taiwan stock market also weakened, plunging 330 points. Behind the dual decline in stocks and currency, the core driver points to continuous foreign capital withdrawals.

This wave of depreciation is not an isolated phenomenon. Looking across Asian currency markets, major non-US currencies such as the New Zealand dollar against the NTD are generally under pressure. The Korean won against the US dollar has seen an even sharper decline, with the monthly drop possibly the worst since the 2008 financial crisis, approaching the psychological level of 1,500 won. The US dollar index slightly retreated to around 98.2 but still absorbed global safe-haven funds, exerting ongoing downward pressure on Asian currencies.

## Foreign Capital Continues to Sell Off, Short-term NTD Difficult to Stop Falling

Forex expert Li Qizhan pointed out that the key reason for the simultaneous decline in stocks and currencies is the strong withdrawal force from foreign investors. After selling nearly 48.9 billion NTD of Taiwan stocks the day before, foreign selling continued yesterday, driving the NTD to depreciate further. Losing the 31.5 level indicates that short-term volatility and a weak trend will become the norm. If the Taiwan stock market drops more than 500 points again, the depreciation pressure in the forex market could intensify further, possibly testing the 31.6 level.

Banking and forex officials believe that the NTD still has room to depreciate before the end of the year, but the 31.5 level itself holds significance: it is a relatively satisfactory exchange rate for exporters and also falls within the central bank’s acceptable policy range. This means that while the central bank allows short-term fluctuations, an invisible defensive line remains in place.

## International Variables Compound, Capital Flows Become Key Determinants

The current pressures impacting the NTD are complex. Market concerns about the prospects of the AI industry have increased, dragging down US tech stocks sharply, which in turn affects related Taiwan stock sectors. Additionally, with Christmas holidays approaching, foreign investors are gradually entering holiday cycles, with frequent capital withdrawals and repositioning activities, further exacerbating the withdrawal situation in Taiwan stocks.

Looking ahead, market focus has shifted to upcoming US economic data releases. These data points are not only crucial for the Federal Reserve’s interest rate cut decisions next year but will also influence global capital allocation directions. Over the past two trading days, Taiwan stocks have already fallen more than 660 points. During the process of stocks and currency hitting bottom together, market sentiment has become increasingly cautious. In the short term, whether the NTD can stabilize depends ultimately on the pace of foreign capital movements and the turning point of global risk sentiment.