Taiwan is weighing a proposal to permit listed companies to distribute dividends in US dollars, a change from the rule requiring payouts in the local currency, people familiar with the matter said.
The Financial Supervisory Commission (FSC) is evaluating operational details, they said, asking not to be identified because the discussions are private.
NO TIMELINE
While the regulator is reviewing the framework, a timeline for a potential rollout remains unclear.
The plan was put forth by Taiwanese firms that maintain sizeable US dollar positions and a high concentration of overseas shareholders, one of the people said.
Proponents said the shift would streamline capital flows by eliminating the conversion process that currently adds friction to the market.
Under existing rules, companies earning revenue in US dollars must convert those funds into New Taiwan dollars to issue dividends, only for foreign investors to immediately convert them back into US dollars to repatriate the capital.
Beyond reducing transaction costs, the change could help smooth seasonal currency fluctuations.
Large-scale conversions during peak dividend cycles often trigger short-term volatility for the NT dollar, a phenomenon also seen in other Asian markets with high foreign ownership, such as South Korea.
A formal policy shift is unlikely to take effect before the peak dividend season in July, one of the people said, adding that amending the relevant regulations would require significant lead time.
The FSC declined to comment.
NT$2.2 TRILLION PAYOUTS
Taiwanese listed companies have announced a total of NT$2.2 trillion (US$69.77 billion) in dividends for last year, with crown-jewel chipmaker Taiwan Semiconductor Manufacturing Co (台積電) among the biggest contributors.
Foreign investors owned 45 percent of Taiwanese listed stocks as of last year, FSC data showed
Posted by Otherwise_Young52201
2 Comments
This is significant because it’s yet another way Taiwan might devalue its currency to prevent the chip sector from reducing the profitability of its other export sectors. By not converting to NTD after receiving USD or other currencies for exports, this in effect reduces demand for NTD and causes downward pressure on the NTD. The NTD still remains the most undervalued currency in the world, consistently ranging in the 55-60% undervaluation range.
This article unfortunately doesn’t report much more apart from this, I would’ve liked to see them analyze downstream effects from the Iran war on their forex reserves given that this is a story about Taiwan’s currency.
Below are useful graphics of Taiwan’s currency activities:
https://preview.redd.it/6hlppvsq0fzg1.png?width=608&format=png&auto=webp&s=1c993656338d08e37ee08cac84f33c6cef99b741
>Foreign investors owned 45 percent of Taiwanese listed stocks as of last year, FSC data showed
That’s not good, why aren’t Taiwanese investing more into stocks and shares?