TWD: Spot Close To 33.00, Equity Outflows Driving TWD Underperformance
Spot USD/TWD holds close to recent highs, the pair last near 32.94. The pair hasn't been above 33.00 since early Feb and for a period in mid Jan. We are above all key EMAs, with the 20-day close by at 32.86, while the 50-day, which has been a more important support point in recent months, is further south near 32.79.
- Headlines have crossed from the head of the CBC earlier today. Governor Yang Chin-Long stating the central bank is most likely to cut rates when inflation dips sub 1.5%. The central bank next meets on March 20, with a current policy rate of 2.0%.
- The current headline y/y inflation rate is 1.58%, but core is already sub 1% y/y (the next inflation print is due on Apr 8).
- In any event, waning US-TW swap rate spreads has aided TWD much in recent months, so a CBC cut may not be a headwind for the local FX.
- The central bank Governor also touched on proposed TSMC investments into the US, stating the potential $100bn investment wouldn't cause significant fund outflows, or impact FX reserves in the short term.
- Weakness in TSMC, amid broader tech equity losses, has contributed to sharp outflows from Taiwan equities so far this year. This week has seen nearly $2.8bn in outflows alone (YTD outflows rest at $12.7bn), second worse in the region only to India this year.
- Like elsewhere in the region, Taiwan equities are stabilizing. The TWSE back above 22000, after dipping sub this level briefly earlier this week.
- Greater stability on this front, coupled with stabilizing portfolio equity flows may help reverse recent TWD underperformance. The currency is the third worst performer in the region (after IDR and INR) in 2025 to date. Beyond that focus will be US tariffs, with reciprocal tariffs planned for early April.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
AUD: A$ Slightly Weaker But Range Trading Ahead Of Wed’s US CPI
AUDUSD fell to a low of 0.6265 following the presidential signing of US tariffs on steel and aluminium imports to begin on March 4 and news that tariffs on chips, pharmaceuticals and cars would now be considered. The pair had risen to around 0.6285 following news of a constructive conversation between Australian PM Albanese and US President Trump. Trump then stated that Australia was being considered for an exemption. AUDUSD is now around 0.6272 to be down moderately on the day. The USD index is 0.1% higher.
- AUDUSD and A$ crosses are range trading as markets wait for Wednesday’s US January CPI data, which is forecast to show a steady headline at 2.9% but a 0.1pp dip in core to 3.1%.
- AUDJPY is 0.1% lower at 95.31 after a trough of 95.08. AUDEUR is slightly down to 0.6090 but off the intraday low of 0.6083. AUDGBP is steady around 0.5076.
- AUDNZD is little changed at 1.1127 after a high of 1.1138 as both Australian and NZ governments spoke to avoid being targeted by US tariffs.
- Equities are mixed with the ASX & Hang Seng up 0.1% but CSI 300 down 0.3% and S&P e-mini -0.2%. Oil prices are higher with WTI +0.3% to $72.55/bbl. Copper is down 0.4% and iron ore is higher at $107-108/t.
- Later US January NFIB small business optimism prints and Fed Chair Powell testifies to the senate and Fed’s Hammack, Williams and Bowman speak. Q4 French unemployment is released and the ECB’s Schnabel appears, and BoE’s Mann & Bailey speak.
MNI EXCLUSIVE: BoJ Consensus On Inflation & Wages Difficult
NEW ZEALAND: NZ More Vulnerable To US Tariffs Than Australia
NZ has come out today and reiterated its close relationship with the US. Its economy is more vulnerable to American protectionism than Australia though, as the US became NZ’s second most important export destination in 2024 overtaking Australia. 12.7% of total NZ exports go to the US compared with 4.6% for Australia, but still around half of that going to China at 25%. On the other side, the US runs a very small trade deficit with NZ of $1.1bn in 2024 and only 0.2% of its imports are from NZ and so it is unlikely to be a tariff target.
NZ merchandise exports by destination % total 2024
