TAIPEI (TVBS News) — Taiwan's central banking authority unveiled significant new controls on currency trading and foreign investment Friday (July 4), as officials move to stabilize financial markets amid ongoing global economic volatility. Tsai Chiung-min (蔡炯民), director of the Central Bank's Department of Foreign Exchange (中央銀行外匯局), announced a series of regulatory interventions. These include a US$10 million daily ceiling on corporate foreign exchange transactions and the introduction of a "T+1" settlement requirement for overseas investors trading in Taiwan's stock market.
The new regulations require companies to distribute their currency conversion operations throughout the trading day rather than executing large transactions all at once. Tsai explained this approach creates more equitable market access for smaller businesses, which generally convert between US$3 million and US$5 million daily, while preventing market distortions caused by dominant players executing massive trades. The central bank has gradually tightened its oversight framework since April, when it began clarifying its regulatory approach to cross-border investment and foreign exchange activities, followed by enhanced monitoring of international capital flows implemented in May.
Under the newly implemented T+1 settlement framework, international investors must transfer funds into Taiwan one day after purchasing securities, or may withdraw proceeds only one day following stock sales. This mechanism, supported by strengthened coordination between the Central Bank and custodian financial institutions, creates a more transparent capital flow environment. "If there is inconsistency in capital inflows and outflows, the authority will closely monitor and demand improvements," Tsai warned. Additional restrictions target specific investment vehicles, with the bank capping foreign participation in inverse exchange-traded funds (ETFs) at 30% and mandating the use of swap arrangements for these potentially market-destabilizing instruments.
The regulatory framework extends to derivatives markets, where financial authorities maintain vigilant oversight of speculative short-selling by international traders, even as the volume of outstanding short positions naturally rises and falls with market conditions. Officials have established comprehensive daily monitoring protocols across all financial sectors as part of their broader strategy to preserve Taiwan's economic stability amid global uncertainties. ◼