The Central Bank of Taiwan announced today that it has detected foreign capital entering the local securities market under the pretext of investment, depositing large sums into New Taiwan Dollar accounts without actual investments being made, potentially exploiting currency differences. The New Taiwan Dollar saw a surge of NT$2 against the US Dollar in May, leading the Central Bank to reaffirm that such practices violate foreign exchange management regulations and should not be used for currency speculation.

The Central Bank urges foreign investors to use the funds they remit according to the declared purpose, specifically for investment in Taiwanese stocks, and not to speculate on the Taiwan Dollar's exchange rate. The Bank highlighted that numerous factors influence exchange rates, including trade surpluses, fiscal budgets, and monetary policies, particularly as financial liberalization has resulted in significant and frequent international capital movements, becoming a main driver of exchange rate fluctuations.

For example, the volume of foreign and domestic capital entering and exiting Taiwan in 2024 is 19.3 times the foreign exchange balance of goods trade, indicating that short-term cross-border capital flows are a crucial factor influencing the appreciation or depreciation of the New Taiwan Dollar.

Furthermore, the Central Bank advises market commentators and media personnel to refrain from speculative judgments about domestic currency issues and intuitive forecasts regarding exchange rates to avoid disrupting the stability and order of the currency market, which could have repercussions on the real economy. Exporters and importers are advised to conduct foreign exchange transactions based on actual demand rather than being swayed by exaggerated market analyses that lead to irrational expectations, which could exacerbate exchange rate volatility and harm their interests.