The central bank is seeking feedback on a plan to tighten currency purchases by foreign stock investors, people familiar with the matter said, a move that could limit speculative bets after a surge in the New Taiwan dollar this year.
The central bank is mulling a policy that requires international investors wanting to buy stocks to show proof of orders before they can purchase the NT dollar, said the people, who asked not to be identified as they were not authorized to speak publicly.
The currency conversion would take place the following day, the people said.
Photo: CNA
The proposal is the latest attempt to push back at the local currency’s almost 14 percent rise against the greenback this year, which has squeezed insurers and hurt the nation’s export-reliant economy.
The central bank last month told foreign investors to exit currency bets taken through exchange-traded funds.
The proposed rule change would make it harder for foreign investors to use currency transfers to speculate on the NT dollar, but it could also add a layer of risk to equity trades, creating a lag between when foreign funds agree to buy securities and when they actually have the local currency to pay for them.
The current rule is that foreign investors are allowed to request currency conversion on the day they place orders for Taiwanese equities, and they do not need to provide any proof of those orders, the people said.
The proposed rule change is possible because local stock trades have a settlement period of two days, they said.
The central bank is set to introduce new measures to curb speculative currency trading by foreign investors, aiming to mitigate recent volatility in the New Taiwan dollar, Department of Foreign Exchange Director-General Eugene Tsai (蔡烱民) said yesterday.
The central bank would meet with custodial banks representing foreign institutional investors next week to discuss enhanced regulatory oversight, Tsai said.
Under the current system, foreign investors can remit funds into Taiwan and hold capital in NT accounts before purchasing local equities. These funds can be converted to NT dollars on the same day of stock purchases to comply with the standard T+2 settlement cycle for equity trades.
However, the central bank plans to revise the rule for investors with “poor self-discipline,” requiring them to shift to a tighter T+1 settlement model.
“This means they will only be allowed to convert funds into NT dollars after executing their stock purchases,” Tsai said, adding that the adjustment aims to enhance transparency and reduce the risk of hot money flows speculating on currency movements.
Funds would no longer be allowed to remain idle in NT accounts for extended periods, the official said.
The proposed measure is not a blanket restriction, but specifically targets foreign investors with poor compliance, Tsai said.
Additional reporting by Crystal Hsu
A subsidiary of a Hong Kong-based company that has lost control of two critical ports on the Panama Canal said it is seeking US$2 billion of compensation in damages from Panama over its “illegal” takeover of the ports. Panama Ports Co, a unit of Hong Kong’s CK Hutchison Holdings (長江和記實業), on Friday said in a statement that it is demanding the sum under international arbitration proceedings that it had already started. The Panamanian government last week seized control of the Balboa and Cristobal ports on each end of the Panama Canal, after the country’s Supreme Court declared earlier that a concession allowing
DETERRENCE: With 1,000 indigenous Hsiung Feng II and III missiles and 400 Harpoon missiles, the nation would boast the highest anti-ship missile density in the world With Taiwan wrapping up mass production of Hsiung Feng II and III missiles by December and an influx of Harpoon missiles from the US, Taiwan would have the highest density of anti-ship missiles in the world, a source said yesterday. Taiwan is to wrap up mass production of the indigenous anti-ship missiles by the end of year, as the Chungshan Institute of Science and Technology has been meeting production targets ahead of schedule, a defense official with knowledge of the matter said. Combined with the 400 Harpoon anti-ship missiles Taiwan expects to receive from the US by 2028, the nation would have
POSSIBILITIES EMERGE: With Taiwan’s victory and Japan’s narrow win over Australia, Taiwan now have a chance to advance if South Korea also beat the Aussies Taiwan has high hopes that the national baseball team would advance to the World Baseball Classic (WBC) quarter-finals after clinching a crucial 5-4 victory over South Korea in a nail-biting extra-inning game at the Tokyo Dome yesterday. Boosted by three home runs — two solo shots by Yu Chang (張育成) and Cheng Tsung-che (鄭宗哲) and a two-run homer by Stuart Fairchild — the triumph gave Taiwan a much-needed second victory in the five-team Pool C, where only the top two finishers would advance to the knockout stage in Miami, Florida. Entering extra innings with the game tied at four apiece, Taiwan scored
MISSION OF PEACE: The foreign minister urged Beijing to respect Taiwan’s existence as an independent nation, and work together to ensure peace and stability in the region Minister of Foreign Affairs Lin Chia-lung (林佳龍) yesterday rejected Chinese Minister of Foreign Affairs Wang Yi’s (王毅) comments about Taiwan, criticizing China as a “troublemaker” in the international community and a disruptor of cross-strait peace. Speaking at a news conference on the sidelines of the Chinese National People’s Congress, Wang said that Taiwan has always been a territory of China and that it would be impossible for it to become its own country. The “return” of Taiwan to China was the natural outcome of the Chinese people’s resistance against Japan in World War II, and that any pursuit of independence was “doomed
RSS