Taiwan's central bank intervened to support the TWD as foreign investors pulled USD28bn from local equities, while record producer price inflation complicates the outlook for consumer prices.
October CPI at 2.33% yoy beat consensus of 2.60% and eased from 2.74%, offering relief, but it is the sixth straight month above the CBC's 2% threshold, while record PPI growth of 19.7% keeps pass-through risk alive. The CBC intervened to support the TWD against roughly USD28bn of net October outflows, and reserves fell USD4.3bn to USD596.4bn. Supportive intervention argues for a firmer TWD, but sustained outflows and inflation risk offset that.
The CBC confirmed it intervened to cushion the TWD against heavy foreign equity outflows, with a net foreign outflow of approximately USD28bn reported for October.
CPI at 2.33% yoy came in below the 2.60% consensus, which is near-term relief, but it was still the sixth month above the CBC's 2% alert level and record PPI growth of 19.7% leaves future price pressure risks open.
The CBC reported a net foreign outflow of approximately USD28bn from equities in October, the outflows being heavy enough to force currency intervention and a USD4.3bn drop in reserves to USD596.4bn. Continued foreign selling of Taiwanese shares would weigh on the local equity market, though the CPI beat to 2.33% vs 2.60% consensus offers some macro relief.
The CBC reported a net foreign outflow of approximately USD28bn for the month, which forced it to intervene in the currency market and drew reserves down USD4.3bn to USD596.4bn.
The Taiwan Dollar remains under pressure as the Central Bank of the Republic of China (CBC) intervenes to counter USD28bn in net foreign equity outflows. While October CPI eased to 2.33%, it remains above the 2% target, and record-high PPI growth of 19.7% signals persistent inflationary risks.
The CBC intervened to cushion the TWD against heavy foreign equity outflows, which totaled approximately USD28bn in October.
The CPI print of 2.33% offered near-term relief by coming in below consensus, but remaining above the 2% threshold and record-high PPI growth keep inflation risks elevated.