Actually a very surprising shift considering some of the other reporting where Taiwan was effectively [further devaluing the NTD against the USD](https://www.reddit.com/r/neoliberal/comments/1t7hprb/chinas_invisible_hand_is_rebalancing_the_oil/). What’s more, this reporting seems to indicate that these funds are making active moves to develop local capital markets rather than just putting money elsewhere, like in European custodians (bonus points to whoever knows what specific capital flows phenomenon I’m talking about here).
This reporting of Taiwanese pension funds diverting capital into local markets on May 6th has noticeably affected the behavior of arbitrage between the USD and NTD, with the NTD strengthening by around a single basis point. So not much, but noticeable:
Overall, however, the process of hedging against the USD will still be very slow, because of both the massive undervaluation of the NTD against the USD and also because of just how much of their funds are international.
This also has implications for the relationship between Taiwan’s central bank and its pension funds in that they are clearly moving in different directions. It used to be that they would move in close coordination with one another with regards to keeping the NTD at a low level.
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Actually a very surprising shift considering some of the other reporting where Taiwan was effectively [further devaluing the NTD against the USD](https://www.reddit.com/r/neoliberal/comments/1t7hprb/chinas_invisible_hand_is_rebalancing_the_oil/). What’s more, this reporting seems to indicate that these funds are making active moves to develop local capital markets rather than just putting money elsewhere, like in European custodians (bonus points to whoever knows what specific capital flows phenomenon I’m talking about here).
This reporting of Taiwanese pension funds diverting capital into local markets on May 6th has noticeably affected the behavior of arbitrage between the USD and NTD, with the NTD strengthening by around a single basis point. So not much, but noticeable:
https://preview.redd.it/8w5buran0c0h1.png?width=983&format=png&auto=webp&s=1e782fb5afe2496842680bd549e630149b892c81
Overall, however, the process of hedging against the USD will still be very slow, because of both the massive undervaluation of the NTD against the USD and also because of just how much of their funds are international.
This also has implications for the relationship between Taiwan’s central bank and its pension funds in that they are clearly moving in different directions. It used to be that they would move in close coordination with one another with regards to keeping the NTD at a low level.
Archive link: [https://archive.ph/FHyZ2](https://archive.ph/FHyZ2)