A brokerage house employee walks past a
Taiwan stocks closed down 529.15 points on October 20, with foreign investors selling net for the 10th consecutive trading day; the New Taiwan dollar closed at 32.617 against the US dollar, a new closing low in over 18 months. The image is an illustration of Taiwan's financial market.

Taiwan’s stock and foreign exchange markets came under pressure at the same time on Oct. 20. As foreign investors continued reducing their Taiwan stock holdings, the Taiwan dollar closed at NT$32.617 against the US dollar, down NT$0.172 on the day. It weakened for a fourth consecutive trading session and reached its lowest closing level in more than 18 months.

According to Central News Agency reports, the Taiwan dollar opened at NT$32.48 and fell to an intraday low of NT$32.672, breaking through the NT$32.5 and NT$32.6 levels in succession. Combined trading volume in the Taipei Foreign Exchange Market and the Yuanta Foreign Exchange Market was about US$4.2765 billion, the 10th-highest level on record.

In the stock market, the weighted index fell 529.15 points to close at 46,292.93, with turnover of about NT$758.684 billion. Foreign investors and mainland Chinese investors posted net sales of NT$79.54 billion, extending their selling streak to 10 consecutive trading sessions. The three major institutional investors recorded combined net sales of NT$96.804 billion. Statistics cited by CNA showed that foreign investors had sold a cumulative NT$838 billion over the 10-session period, while their net sales on the main board since the start of the year had exceeded NT$2.11 trillion.

Market pressure has been linked to volatility in international technology stocks, concerns over returns on AI investment, the interest-rate outlook and capital flows. If foreign investors remit funds overseas after selling Taiwan stocks, the move could add pressure on the Taiwan dollar. Its subsequent direction, however, will also depend on exporters’ US dollar selling, central bank intervention, movements in the US dollar internationally and broader risk appetite.

Market observers also noted that the long-term fundamentals of Taiwan’s technology sector are not the same as short-term capital movements. Although AI-related demand continues to provide support, Taiwan’s stock and foreign exchange markets could remain affected in the near term by global capital reallocation and earnings reports from major technology companies. Investors will be watching foreign buying and selling, exchange-rate movements and the latest outlook from major technology companies for AI capital spending.