Taiwan Dollar at Risk of Insurers Reducing $95 Billion of Hedges

The Taiwanese dollar is expected to lose a crucial source of support as new accounting rules allow insurers to unwind foreign-exchange hedges on as much as NT$3 trillion ($95 billion) of overseas assets.

The country’s life insurers hold about $700 billion in assets overseas, and use hedging contracts to manage exchange-rate swings. Those hedges require insurers to lock in future purchases of Taiwan dollars, helping support the currency.