TSMC Expected to Issue USD Dividends Next Year; Yang Chin-long: Beneficial for Stabilizing Exchange Rates

(CNA, reporter Pan Tzu-yu, Taipei, July 9) The Financial Supervisory Commission (FSC) plans to allow listed and OTC companies to issue cash dividends in US dollars, with the earliest implementation in 2027. TSMC has previously expressed a positive attitude. Central Bank Governor Yang Chin-long stated today that if large enterprises switch to issuing cash dividends in US dollars, it would help reduce fluctuations in the New Taiwan Dollar exchange rate.

Yang Chin-long appeared before the Legislative Yuan's Finance Committee today to deliver a special report on "The Central Bank's Mid-to-Long-Term Response Strategies and Policy Tools Amidst Multiple Risks in the Stock Market, Inflation, Exchange Rates, and Real Estate Market."

Some legislators expressed concern that with the dividend payout season approaching, foreign investors continue to remit funds abroad after receiving dividends, causing the New Taiwan Dollar to depreciate past the 32 mark. Yang Chin-long explained that after receiving dividends, foreign investors decide their next steps based on their investment strategies; they do not necessarily remit funds immediately and may continue to invest in the stock market.

Regarding market attention on foreign investors heavily selling Taiwanese stocks and remitting funds, Yang Chin-long stated that foreign investors reallocating assets after achieving a certain level of profit is a normal investment operation, a concept of "taking profits."

Legislators further inquired whether the FSC's plan to allow listed and OTC companies to issue cash dividends in US dollars, with the earliest implementation in 2027, would help reduce New Taiwan Dollar exchange rate fluctuations if TSMC were to be the first to respond.

Yang Chin-long directly stated that under the current mechanism, companies must first sell US dollars to convert them into New Taiwan Dollars before issuing dividends in New Taiwan Dollars. If foreign investors then remit funds abroad after receiving dividends, they must buy back US dollars. This process involves two currency conversions, which can easily amplify exchange rate volatility. If dividends are issued directly in US dollars, it is expected to reduce the related currency conversion demand, thus it should be helpful in stabilizing the exchange rate.

As for the recent trend of the New Taiwan Dollar, Yang Chin-long reiterated that the Central Bank continues to follow the "willow theory," allowing for moderate exchange rate fluctuations and intervening appropriately when necessary to prevent excessive volatility. "The willow's fluctuation range is not large, unless there is a typhoon." (Editor: Lin Shu-yuan) 1150709

Stand with facts. Your every sponsorship is a force to protect press freedom.

Download the CNA "First News" APP to grasp the latest news in real-time.

The text, images, and videos on this website may not be reproduced, publicly broadcast, publicly transmitted, or used without authorization.