Confusion in the dollar market
The Taiwanese dollar weakened against the U.S. dollar, reaching its lowest level since April 2025, negating earlier gains that had brought the TWD to its strongest appreciation since the 1980s.
As Bloomberg reminds, July in Taiwan is the peak period for dividend payouts.
This means that the significant share of foreign investors in the semiconductor sector could further increase capital flows toward the U.S. dollar, thereby putting pressure on the Taiwanese dollar rate.
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Data indicate that companies listed on the Taiwan Stock Exchange will pay over 2,5 billion Taiwanese dollars (77.7 bn USD) in cash dividends this year.
If the forecast proves correct, it will be the highest value in the history of data collected by Bloomberg since 1990.
“Today’s TWD weakening is likely due to the repatriation of funds from dividend payouts,” said Khoon Goh, head of Asian market research at Australia & New Zealand Banking Corporation.
“Taiwan Semiconductor Manufacturing Co. (TSMC) paid its quarterly dividend today, and given the significant foreign investor stakes, these flows are putting pressure on the TWD rate,” he added.
The expert predicts that the TWD/USD pair will soon drop to 32,5 due to further dividend payouts at the end of July.
Additionally, the risk of capital outflow is amplified by the tense geopolitical situation in the Middle East related to the renewed escalation of conflict along the Washington-Tehran line.
“The strengthening of the U.S. dollar due to expectations that U.S. interest rates will remain high for an extended period, combined with the oil price rebound caused by renewed tensions in the Middle East, presents an additional challenge for the Taiwanese currency,” Bloomberg reports.
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USD/TWD rate on Thursday, July 9
The U.S. dollar to Taiwanese dollar rate on Thursday, July 9 is at 32,1 USD (+0.46%).
At the beginning of the week, the Central Bank of Taiwan intervened when the TWD again weakened.
Bank president Yang Chin-long informed that policymakers will not allow excessive volatility in the currency market.
Chart. U.S. dollar to Taiwanese dollar rate (USD/TWD)
Source: Trading Economics.
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Source: Bloomberg.
