Latest news with #NewTaiwanDollar
Wall Street Journal
a day ago
- Business
- Wall Street Journal
Taiwan Dollar Strength Spells Trouble for Tech Exporters, Insurers
Another flare-up in the Taiwan dollar's strength is unwelcome news for the island's exporters and life insurers. The New Taiwan dollar hit a three-year high against the greenback on Friday, bringing year-to-date gains to around 12%. It was last changing hands at 29.01 to the U.S. dollar, hovering at a key psychological level.
Mint
a day ago
- Business
- Mint
There's a wild card coming for tech earnings. It's not AI.
The makings of a forex mess have already shown up in the financials of Taiwan Semiconductor Manufacturing. This past week, the world's leading chip maker allocated $10 billion to calm the effects of the rapid changes in the U.S.-Taiwan currency exchange rate. It's the company's third such move in the past 13 months, now totaling $18 billion. Taiwan Semi collects U.S. dollars from customers like Apple and Nvidia, but reports in its domestic New Taiwan Dollar. For years, a favorable conversion rate helped the company. It collected the strong currency and reported its financials every quarter in the weaker one. Taiwan Semi customers like Apple saw the other side of the trade. They collected a majority of sales in weaker currencies overseas and then had to convert them back to the U.S. dollar for their consolidated financial reporting. Now, largely thanks to shifting U.S. policy, everything is about to flip. The dollar has weakened, and with it Taiwan Semi's margin-enhancing currency trade. 'Everyone percent depreciation of the U.S. dollar against the NT dollar would result in an approximately 0.4 percentage point decrease in the Company's operating margin," it said in its latest annual report. To mitigate this risk, Taiwan Semi buys exchange rate hedges—and $18 billion buys a lot of hedging. The company uses a mix of U.S. dollar denominated bonds, currency options, futures, and swaps. The increased need for hedging is a reflection of the rapid changes in the U.S. dollar exchange rate. In 2022, the U.S. Federal Reserve began raising interest rates. That made U.S. Treasury debt, already the safest asset in the world, particularly attractive. At the same time, U.S. economic growth outpaced the rest of the world, and so too did its corporate profits. Attractive debt and stocks led to financial inflows from the rest of the world—and a strong dollar. Ultimately, the U.S. dollar rose for three years against the Taiwanese dollar, a boon for TSMC's revenue growth and profitability. In the third quarter of 2022, as the U.S. dollar shot up in value, TSMC's annual revenue growth rate was 12 percentage points higher measured in Taiwanese dollars than U.S. dollars. In 2025, with the U.S. dollar quickly declining against its Taiwanese counterpart, this effect has reversed. At the end of January, the U.S. dollar was up against the Taiwanese dollar by 5% from the year-earlier period. Near the end of June, it's down 10%. Investors should expect TSMC's revenue growth and profitability to take a hit as a result. Much of the currency swing is due to shifting U.S. policies. President Donald Trump's wavering commitment to NATO has prompted Germany and other European countries to invest in defense, stimulating their domestic economies. Meanwhile, the trade war, and the anticipation of a lower U.S. trade deficit, means there will be fewer dollars going out to the world that return as foreign direct investment in U.S. assets. 'Other countries are considering investing more in themselves," Geoffrey Yu, a senior market strategist at BNY, told Barron's. 'Dollar investors are holding on to very high valuations for U.S. tech and they're thinking, OK, I've ridden the wave of U.S. exceptionalism over the past three years because there was no investment case anywhere else. But now, suddenly you are seeing an investment case in other areas." Among U.S. tech companies, Apple has the most to gain from a weakening dollar. It gets 64% of its sales from overseas. In the first quarter of fiscal 2023, Apple lost eight percentage points of revenue growth to the fast-rising dollar. In the same quarter, Meta Platforms lost six percentage points. All the Big Tech companies get a large portion of their revenue from abroad and are subject to the ebb and flow of U.S. dollar exchange rates. In Apple's annual report, it warns, 'The weakening of foreign currencies relative to the U.S. dollar adversely affects the U.S. dollar value of the Company's foreign-currency-denominated sales and earnings, and generally leads the Company to raise international pricing, potentially reducing demand for the Company's products." In short, a strong dollar is bad for Apple. But now the winds are blowing in its direction. The U.S. Dollar Index, which compares the U.S. dollar to a basket of foreign currencies, is down 8% since last year. For Apple and other U.S. multinational companies, that tailwind will show up beginning with the second quarter. In its fiscal-second-quarter earnings call on May 1, Apple said that its currency headwinds would improve, but that it would still be a drag. Since then, the Dollar Index has gone down another 3%, to a recent 97.15, the lowest since February 2022. Despite the falling exchange rates and the resulting boost to Apple sales, Wall Street's sales estimate for Apple's current quarter has gone down. That suggests there could be a surprise to come. Write to Adam Levine at
Crypto Insight
10-05-2025
- Business
- Crypto Insight
Taiwan lawmaker calls for Bitcoin reserve at national conference
Taiwanese lawmaker Ko Ju-Chun has called on the government to consider adding Bitcoin to its national reserves, suggesting it could serve as a hedge against global economic uncertainty. Ko, a legislator at-large in Taiwan's legislative body, the Legislative Yuan, took to X on Friday to report that he had advocated Bitcoin investment by the Taiwanese government at the National Conference on May 9. In his remarks, Ko cited Bitcoin's potential to become a hedge amid global economic risks and urged Taiwan to recognize the cryptocurrency alongside gold and foreign exchange reserves to boost its financial resilience. Ko's announcement came shortly after the legislator held talks with Samson Mow, who advocates for Bitcoin adoption by states like El Salvador at his BTC tech firm Jan3. Taiwan is an export-oriented economy Ko highlighted that Taiwan is an export-driven economy that has experienced significant fluctuations in its national currency, the New Taiwan dollar, amid global inflation and intensifying geopolitical risks. 'We currently have a gold reserve of 423 metric tons, and our foreign exchange reserves amount to $577 billion, including investments in US Treasury bonds,' the lawmaker stated. In a scenario of more intense currency volatility or potential regional conflicts, Taiwan may 'very likely be unable to ensure the security and liquidity,' Ko continued, adding that Bitcoin could be a great addition to Taiwan's reserves for several reasons. 'Bitcoin has been operating for over 15 years. It has a fixed total supply, is decentralized, and is resistant to censorship. Many countries are focusing on its hedging attributes. At the same time, in intense situations, it may not face the risk of embargo,' he said. Bitcoin is not the only solution Referring to many global initiatives considering Bitcoin adoption as a reserve asset, Ko stressed that he's not advocating for Bitcoin as the 'only solution' to rising economic challenges. Instead, the legislator suggested adding a 'small proportion of Bitcoin' into the diversified assets as tools for sovereign asset allocation and risk hedging, and backup capacity of Taiwan's financial system. He previously suggested that Taiwan could allocate a maximum of 5% of its $50 billion reserve to Bitcoin in an X post on May 6. 'When exchange rate risk and regional uncertainty increase, it is time to introduce new tools to construct a more flexible financial strategy framework,' Ko said, adding: 'As former Dean Chen Chong said, Bitcoin is the gun of the digital era. It may also be the gold of the digital era, the silver of the digital era. Or it could be gunpowder. A wise nation will not let weapons be in others' hands.' The news comes as Taiwan is emerging as a crypto-friendly jurisdiction, with the Financial Supervisory Commission pushing institutional trials of crypto custody services in late 2024. Mainland China continues to maintain its hostile stance on cryptocurrency after imposing a ban on multiple crypto activities, including mining, in 2021. Source:
Business Mayor
10-05-2025
- Business
- Business Mayor
Taiwan eyes Bitcoin as hedge against inflation and US Treasury exposure
Lawmaker Ko Ju-Chun suggests adding Bitcoin to national reserves. Taiwan has 423 metric tons of gold in its asset base. New Hampshire in the US passed a law to include Bitcoin in state reserves. Taiwan is considering a significant policy shift—one that could see Bitcoin join its national reserves. Faced with inflationary pressure, global trade tension, and increasing reliance on US Treasury bonds, the country is now questioning whether its financial buffers are truly secure. Legislator Ko Ju-Chun recently proposed the inclusion of Bitcoin in the central bank's reserve mix, citing its decentralised nature and fixed supply as a strategic hedge against future financial instability. The proposal reflects a broader reassessment of traditional reserve assets, especially as over 90% of Taiwan's US$577 billion in foreign exchange reserves are currently tied to US Treasuries, raising concerns about diversification and liquidity during crises. Rising currency risks and dependency on US Treasuries Taiwan's export-led economy is particularly sensitive to geopolitical shifts and inflation trends. With growing tensions between the US and China and the risk of supply chain disruptions, lawmakers are increasingly alert to the vulnerabilities of the New Taiwan Dollar (NTD). Currently, Taiwan holds 423 metric tons of gold and nearly all its foreign exchange in US dollar-denominated assets. Analysts note that while these have been historically reliable, their over-concentration exposes the country to US monetary policy and potential sanctions should relations deteriorate. In an address to parliament, Ko Ju-Chun highlighted that Taiwan needs 'strategic flexibility' in how it manages its reserves, especially under scenarios of financial decoupling or restricted access to dollar markets. Read More Solana (SOL) Price Prediction: 2023, 2024, 2025 and Beyond Bitcoin floated as a hedge, not a replacement The core of the proposal is not to upend Taiwan's current reserve strategy but to diversify it. Ko's plan calls for allocating a small percentage of Taiwan's reserves to Bitcoin, which he argues would provide an uncorrelated asset that is globally accessible and cannot be arbitrarily inflated. Bitcoin's fixed supply of 21 million tokens, combined with its decentralised ledger system, is a key reason why it is being considered. According to Professor Liu Yiru of National Taiwan University, these features make it particularly resistant to inflationary dilution—unlike fiat currencies, which central banks can expand during economic shocks. Former Premier Chen Cong also weighed in, stating that although Bitcoin may not serve as a transactional currency at scale, its role as a digital store of value could help safeguard Taiwan's financial sovereignty. Global momentum for Bitcoin reserves Taiwan's deliberation comes at a time when other governments are also experimenting with Bitcoin at the state level. In the US, New Hampshire recently passed the Bitcoin Reserve Act, allowing the inclusion of the digital asset in its state reserves. The move has prompted discussions in other American states and emerging markets facing high inflation or currency instability. While Taiwan has yet to formalise any such measure, the conversation signals a shift in how policymakers view crypto-assets, not merely as speculative investments but as potential components of national financial infrastructure. In addition to legislative interest, Ko suggested that a task force be set up to study the feasibility, volatility, and custodial risks associated with Bitcoin reserves. The central bank has not publicly responded to the proposal, though it is expected to be discussed further in upcoming budget and monetary policy reviews. The broader context of these debates also includes Taiwan's need to balance its strong technological sector with the risks posed by its geopolitical location. Diversifying reserve assets may serve not only economic goals but also broader strategic autonomy.
Yahoo
10-05-2025
- Business
- Yahoo
U.S. dollar's slide is the ‘bane' of Asia's central bankers
The New Taiwan Dollar made headlines this week after it gained over 5% against the U.S. dollar before the island's central bank stepped in to curb what it deemed 'excessive' inflows. The NTD's shift may have been the most dramatic move this week, but the U.S. dollar strengthened against several currencies this week, including the Malaysian ringgit, the Singapore dollar, and the Indonesian rupiah. Even the Hong Kong Monetary Authority, the city's de facto central bank, had to recently sell Hong Kong dollars to maintain the city's peg against the U.S. dollar. For years, some Asian countries griped about a too-strong U.S. dollar, complaining that it contributed to inflation by making needed imports like food and fuel more expensive. Now, countries are getting what they wished for—a weakening dollar—but the results appear to be decidedly negative for one set of officials: Central bankers. On Monday, Yang Chin-long, governor of Taiwan's central bank, said that officials had intervened in the market to curb 'excessive' inflows, without giving details. Yang made the comments after a sudden 9% two-day rise in the NTD's value versus the dollar. The central bank leader also denied that the currency exchange rates were part of trade negotiations with the U.S. 'Foreign exchange volatility is the bane of central bankers,' noted Priyanka Kishore, director and principal economist at the consultancy Asia Decoded. Central bankers may not care about the direction of a currency's move, but they still want shifts to be orderly. 'Heightened volatility, if sustained over a period of time, fuels uncertainty and has financial and real economic consequences,' Kishore said. For example, a quickly strengthening currency will hurt exporters, already under strain from tariffs. 'Sharp appreciation impacts their outlook and planning, and also erodes competitiveness,' Kishore added. Taiwan's insurance firms have also invested heavily in the U.S., particularly in bonds. Insurers may have been 'somewhat under-hedged' against the dollar, suggested Danny Khoo, country head of sales trading for Saxo Bank in Singapore. 'When all of them try to do that at the same time, that could be why the New Taiwan dollar got hit slightly harder compared to other Asian currencies,' he added. Still, a weakening U.S. dollar is still good news for some Asian economies, particularly those that hold U.S. dollar-denominated debt. A weaker U.S. dollar reduces the debt burden for these countries. Some emerging Asian economies prefer to take advantage of relatively lower interest rates by borrowing in U.S. dollars instead of in their local currencies. A weaker dollar may also be good for Asian consumers, as it makes imports less expensive. The U.S. dollar has sunk this year in the wake of U.S. President Donald Trump's changes to trade policy. 'Trump's very harsh tariff policies don't give a lot of confidence in the U.S.,' Khoo said. 'People are not as confident in the U.S. economy and the political landscape.' The dollar index trended upward in the latter part of this week, after the U.S. announced a trade deal with the U.K. Asian countries currently in negotiations with the Trump administration might see a stronger currency as an asset. The U.S. president has complained that a strong dollar makes U.S. exports less competitive, and has accused countries like Japan and China of manipulating their currencies. This story was originally featured on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
