Amid the Taiwan dollar’s rapid appreciation, Taiwan’s Central Bank unveiled tighter foreign exchange controls to limit speculation. On Friday, Tsai Chiung-min, director of the bank’s Department of Foreign Exchange, announced several new measures to stabilize currency flows.
First, the bank will impose a daily cap of US$10 million on corporate foreign exchange transactions. This measure targets large companies, as most small and medium-sized enterprises trade only US$3–5 million daily. By setting this ceiling, the bank hopes to reduce daily volatility in currency markets.
Second, the Central Bank introduced a new settlement rule called “T+1.” Under this rule, foreign investors must complete currency remittances within one day of buying or selling securities. This applies to both inbound and outbound capital movements. If an investor buys shares today, the money must be transferred by tomorrow. Likewise, funds from sales must leave the country by the next day.
Since May, the Central Bank has closely monitored foreign capital entering Taiwan’s stock market. Officials noticed that some investors held large sums of money for extended periods. This behavior raised red flags for possible currency speculation. In response, the bank will meet custodian banks next week to ensure the new regulations are enforced.
The Central Bank may introduce more stringent foreign exchange controls if necessary. One possible step could include requiring prior approval for large inflows of foreign funds. This would further restrict speculative movements and protect the local currency.
To prevent market instability, the Central Bank will enforce its rule on exchange-traded funds. Foreign investors must not hold more than 30% of any single inverse ETF. Additionally, the bank will require swap arrangements for ETF-related investments.
Tsai warned that the bank will watch large capital flows carefully. Any investor who fails to follow regulations will face tighter scrutiny. The Central Bank remains firm in its efforts to uphold foreign exchange controls and maintain financial stability in Taiwan.
