Taiwan Plans Tighter Currency Purchase Rules for Foreign Investors💰
Background📈
Taiwan’s central bank is seeking feedback on a plan to tighten currency purchases by foreign stock investors, according to people familiar with the matter. This move aims to limit speculative bets after a surge in the local dollar this year.
Proposed Policy Details🔍
The central bank is mulling a policy requiring international investors wanting to buy Taiwanese stocks to show proof of orders before they can purchase the Taiwan dollar. The currency conversion would then take place the following day.
Reason for the Change💡
This proposal is the latest attempt to counter the Taiwan dollar’s almost 14% rise against the greenback in 2025, which has squeezed insurers and hurt Taiwan’s export-reliant economy. Just last month, the central bank told foreign investors to exit currency bets taken through exchange-traded funds.
Impact on Investors⚠️
The proposed rule change would make it harder for foreign investors to use currency transfers to speculate on the Taiwan dollar. However, 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.
Current vs Proposed Settlement Rules📅
Currently, foreign investors are allowed to request currency conversion on the same day they place orders for Taiwanese equities and don’t need to provide any proof of those orders. The proposed rule change is feasible because local stock trades have a settlement period of two days.
🤝 Consultation Process🤝
The central bank has asked foreign custodian banks for feedback on the rule and will hold a meeting with a group of banks next week. Taiwan’s central bank didn’t respond to requests for comment.
Broader Measures Taken🛠️
Taiwanese officials have taken various steps to ease the surge against the dollar, including instructing some banks to delay exporters’ dollar sales. Earlier this week, the government announced a task force to help exporters and small-and-medium sized companies mitigate the fallout of the currency move.
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