AI Frenzy Sparks Strong Rebound in Taiwan Stocks
Ahead of the U.S. Federal Reserve's policy decision, markets turned cautious with shrinking volume. AI giant Anthropic filed for an initial public offering, reigniting investor enthusiasm for AI-related stocks, with all four major U.S. indexes rising, lifting Taiwan stocks to open higher and strengthen, hitting a high of 47,060.46 points. The benchmark index closed up 939.35 points at 47,035.58, reclaiming the 47,000 level, as foreign investors ended two straight sessions of selling and turned net buyers of NT$15.922 billion.
Strong Stocks, Higher Currency: NT Dollar Posts Second Gain
The NT dollar opened at 32.44 against the U.S. dollar and, tracking the strong stock rally, once advanced toward the 32.3 level, touching a high of 32.398; however, with foreign investors trading in both directions, it briefly weakened to 32.498. In the afternoon, as Taiwan stocks closed higher, some foreign investors turned to inflows, coupled with exporters' foreign-exchange selling, it closed at 32.418, up 3.4 cents, marking a second straight gain and an over-one-week high. Total turnover in the Taipei and 元太 foreign exchange markets reached US$2.488 billion.
Caution Ahead of Fed Decision Shrinks Volume
Foreign exchange traders said the Federal Reserve will announce its rate decision early Thursday Taiwan time, with markets widely expecting no change. However, with the Middle East conflict continuing, U.S. inflation pressures persisting, and concerns over AI financing unresolved, any hawkish signal could spark fresh volatility in financial markets, and uncertainty has notably shrunk trading volume. Despite two straight days of gains, the recent weakness remains hard to reverse, with the NT dollar depreciating more than 5.6 jiao since October, becoming the weakest-performing Asian currency this year, with frequent stock-currency double losses recently.
Central Bank Reiterates Willow Theory for Intervention
In response to the strong trade surplus yet relatively weak NT dollar, Central Bank Governor Yang Chin-long told the Legislative Yuan that the main reason is foreign investors' substantial profits from Taiwan stocks this year, who, after reaching a certain level, chose to take profits and repatriate funds based on investment strategy, asset allocation rebalancing and risk management considerations. Yang reiterated there is no specific line in the sand, and the bank will dynamically adjust in line with the willow theory, allowing the exchange rate to sway but not too much, intervening based on the strength of foreign investor flows rather than price levels, stepping in when the force is too strong and amounts are large.