## New Taiwan Dollar Breaks Below 31.5, Stocks and Forex Face Simultaneous Pressure, US Dollar Relatively Stronger Driving Depreciation

The Taipei financial market faces a double blow today. Due to significant foreign capital withdrawals, the Taiwan stock index plummeted over 500 points intraday, closing down 330 points; simultaneously, the New Taiwan Dollar (NTD) against the US dollar also weakened, breaking through the 31.5 mark in the afternoon, closing at 31.475, a depreciation of 9.5 points, hitting a nearly seven-month low. The daily trading volume in the forex market expanded to USD 20.56 billion.

Today, the NTD started at 31.38, the flat rate, but was pressured to weaken following a surge in US dollar buying after foreign investors sold stocks. Although exporters seized the opportunity to sell NTD, they still found it difficult to resist the strong capital outflow pressure, causing the exchange rate to gradually approach the 31.5 level. The midday close was at 31.485, with further weakening in the afternoon.

## Foreign Capital Outflows Intensify, Short-term NTD Remains Weak and Volatile

Forex analyst Li Qizhan pointed out that the core driver behind the synchronized decline of stocks and forex is the unexpectedly strong withdrawal of foreign capital. After a large sell-off of nearly NT$48.9 billion in the Taiwan stock market on the previous trading day, foreign selling pressure continued today, directly pushing the NTD weaker. He assessed that once the 31.5 support level is broken, the NTD will likely remain in a short-term weak consolidation pattern. If the Taiwan stock index drops another 500 points tomorrow, the depreciation pressure in the forex market could further intensify, possibly testing the 31.6 level.

Banking officials predict that there is still room for the NTD to depreciate before the end of the year. Currently, the 31.5 level is not only a relatively favorable quote for exporters but also within the central bank’s policy tolerance range.

## International Market Uncertainty Rises, US Dollar Strength Adds Regional Currency Pressure

Apart from foreign capital factors, uncertainties in the international market also exert downward pressure on the NTD. Market optimism about the artificial intelligence industry has cooled, leading to sharp fluctuations in US tech stocks, which in turn impact related Taiwanese stocks. With Christmas approaching, foreign investors are gradually entering holiday mode, increasing the pressure on capital allocation and position adjustments. As long as foreign capital continues to flow out of Taiwan stocks, the depreciation expectation for the NTD will be difficult to reverse.

It is worth noting that not only the NTD is under pressure; major Asian currencies have also recently suffered from the strong US dollar. The Korean won against the dollar has accelerated its depreciation since December, approaching the psychological threshold of 1500 won, with the monthly decline possibly reaching the worst since the 2008 global financial crisis, prompting the South Korean government to hold emergency meetings to seek countermeasures. Today, the US dollar index slightly retreated to around 98.2, while the RMB midpoint rate slightly increased.

## Focus on US Economic Data and International Capital Flows to Judge Mid-term NTD Trend

Looking ahead, market attention has shifted to upcoming US economic indicators, which will serve as important references for the Federal Reserve’s decision on whether to cut interest rates next year, thereby influencing global capital allocation. Over the past two trading days, the Taiwan stock index has fallen more than 660 points, deepening the market’s wait-and-see sentiment as stocks and forex hit bottom simultaneously. The future trend of the US dollar index will be a key reference for the NTD exchange rate.