Goldman Predicts 50% Odds of 10% U.S. Tariff on Copper by Q1 Close 
Energy Sector Outlook 2025: AI's Role and Market Dynamics 
US Gas Market Poised for Supercycle: Bernstein Analysts 
U.S. Banks Report Strong Q4 Profits Amid Investment Banking Surge 
Lithium Market Poised for Recovery Amid Supply Cuts and Rising Demand 
2025 Market Outlook: Key January Events to Watch 
Moldova Criticizes Russia Amid Transdniestria Energy Crisis 
S&P 500 Relies on Tech for Growth in Q4 2024, Says Barclays 
Global Markets React to Strong U.S. Jobs Data and Rising Yields 
Wall Street Analysts Weigh in on Latest NFP Data 
Stock Futures Dip as Investors Await Key Payrolls Data 
China’s Growth Faces Structural Challenges Amid Doubts Over Data 
Bank of America Posts Strong Q4 2024 Results, Shares Rise 
US Futures Rise as Investors Eye Earnings, Inflation Data, and Wildfire Impacts 
Oil Prices Dip Slightly Amid Focus on Russian Sanctions and U.S. Inflation Data 
Urban studies: Doing research when every city is different 
China's Refining Industry Faces Major Shakeup Amid Challenges 
USDTWD increased 0.023 or 0.08% to 30.840 on February 14 from 30.8250 in the previous trading session.
Taiwan's trade surplus shrank to USD 4.71 billion in December of 2018 from USD 6.13 billion in the same month of the previous year, missing market expectations of a USD 5.12 billion surplus.
While Taiwan’s life insurance industry holds TWD16.3tn in foreign assets (69% of total invested capital), reflecting lack of attractive domestic fixed income assets. This large stock of offshore assets has created a currency mismatch challenge given liabilities are mainly TWD-denominated savings-type policies.
The changed regulations reduce USDTWD selling flows. Local reports indicate that the FSC has agreed to increase the monthly forex reserve ratio for changes in FX valuations for life insurance companies starting from January.
Life insurers use currency swap and NDFs to hedge the majority of their foreign assets, but there remains a part that is FX unhedged. For that part, life insurers each month put aside capital worth 0.05% of the underlying overseas investment with FX exposure (known as the monthly reserve ratio) into a “forex reserve” pool. 50% of monthly FX translation gains/losses stemming from unhedged FX asset are allowed to go in and out of the “forex reserve” pool to reduce earnings volatility.
Given increasingly wider US-Taiwan interest rate differentials stemming from Fed hikes, hedging costs have been rising and hurting earnings.
Consequently, insurance companies have been lobbying for a rise in the monthly reserve ratio to 0.06% and for allowing 60% of FX translations gains/losses to be netted out from the “forex reserve” pool.
To the extent FSC has accepted this proposal, insurance companies can reduce their FX hedge ratio. This is possibly why TWD did not appreciate amid higher TWSE levels and YTD inflows into the stock market from offshore investors. Note that every 1%pt change in lifer’s hedge ratio will lead to USDTWD flow of US$5.3bn. Taiwan’s TWSE index dipped 0.07% although global funds added to their holdings in local main board shares by USD 110.1mn on Wednesday. Courtesy: JPM
Currency Strength Index: FxWirePro's hourly CNY spot index is inching towards 30 levels (which is mildly bullish), while hourly USD spot index was at 2 (neutral) while articulating (at 08:34 GMT).
For more details on the index, please refer below weblink: http://www.fxwirepro.com/currencyindex
