Taiwan’s Whipsawing Capital Flows Put Currency Stability at Risk

A wild divergence in Taiwan’s cross-border capital flows in the second quarter is raising the prospect of higher volatility in the local dollar.

The island’s residents dumped the biggest amount of foreign securities since the financial crisis in 2008, while global funds ramped up holdings of Taiwan’s assets to a record high in the same period, second-quarter balance of payments data released by the central bank on Wednesday show. Corporate investments abroad also soared.