$54.3 Billion Leaves Taiwan Since July, Pressuring Currency Amid Technology Concerns

Key Facts

Taiwan’s central bank said foreign institutional investors withdrew a net $54.3 billion since the beginning of July 2026, as the Taiwan dollar fell about 2% against its U.S. counterpart. The bank reported the figure in a written report submitted to parliament, linking the outflow to pressure on the currency and local stocks. The total flow calculation includes capital gains and cash distributions, so it differs from the value of stock sales alone. Foreign investors recorded net sales of Taiwanese stocks worth NT$1.25 trillion, equivalent to about $38.7 billion. The stock sales cover the period from July through October 21, while the $54.3 billion outflow figure covers the period since early July.

The central bank attributed the latest pressure to renewed concerns about a military conflict between the United States and Iran, alongside a global selloff in technology stocks. It said concerns about artificial intelligence spending contributed to the selloff, which weighed on the Taiex index and prompted foreign investors to withdraw more funds. These factors reflect the sensitivity of Taiwan’s market to moves in the technology sector, as well as the impact of geopolitical tensions on capital flows. In the first half of the year, foreign institutional investors had already recorded net outflows of $23.3 billion. The bank said those flows added downward pressure on the currency amid rising military tensions in the Middle East and concerns about Federal Reserve tightening.

October’s market moves showed a divergence between Taiwanese stocks and their U.S. semiconductor counterparts. Between October 7 and 16, the Philadelphia Semiconductor Index fell 15.7%, while Taiwanese stocks declined 5.4%, according to the central bank. In the foreign-exchange market, the dollar rose from NT$31.895 on October 12 to NT$32.338 on October 16, reflecting a 1.37% drop in the local currency. The figures point to tangible pressure during the cited trading days, although Taiwanese stocks’ losses over the same period were smaller than the U.S. semiconductor index’s decline. The bank linked the global selloff to concerns about artificial intelligence spending, which hit technology stocks and affected investors’ valuations of those companies.

Year to date through October 21, the Taiwan dollar fell 3.23% against the U.S. dollar, while the dollar index rose 3.49%. The Taiwan currency’s loss was smaller than the Swiss franc’s 3.89% decline, the euro’s 4.35% drop and the Thai baht’s 6.29% fall over the same period. The comparison puts the currency’s performance in the context of the broader foreign-exchange market, where its year-to-date loss was less than those of the three currencies cited. But that does not erase the pressure seen since July, when the outflow coincided with a roughly 2% decline against the dollar. Sales and flow data also measure different aspects of capital movement, since gross flows include capital gains and cash distributions as well as asset sales.

The bank described Taiwan as a small, open economy that relies heavily on trade and has a relatively shallow foreign-exchange market. It said central bank intervention in the currency market is necessary to help stabilize the currency given these characteristics. In the first half of 2026, the bank sold $17.04 billion more than it bought, saying the net sales were aimed at calming volatility in the local foreign-exchange market. The bank seeks to keep fluctuations in the Taiwan dollar within a relatively narrow range compared with the euro, South Korean won and Japanese yen. It said this helps exporters set prices and secure orders, supporting the economy.

The bank said it would continue to monitor international financial developments and foreign fund flows, adjusting its intervention to changes in supply and demand in the foreign-exchange market. It said its aim was to maintain dynamic stability in the Taiwan dollar as part of its approach to limiting currency volatility. The stance follows a roughly 2% decline against the dollar since the beginning of July and a net outflow of $54.3 billion over the same period. The bank also reported net stock sales of NT$1.25 trillion through October 21, a figure separate from total flows that include capital gains and distributions. The report did not specify when the bank might next intervene, but said its decisions would take account of market developments and foreign investor flows.