Yang Jin-long's Legislative Yuan Testimony: Foreign Dividend Receipts May Not Trigger Depreciation; Dollar Payouts Could Reduce FX Volatility

Taiwan Central Bank Governor Yang Jin-long, testifying before the Legislative Yuan's Finance Committee on the 9th, urged investors to 'invest according to their financial capacity' and cautioned against excessive leverage, emphasizing the need for awareness of potential stock market reversals. Regarding the upcoming dividend season, Yang noted that foreign investors receiving dividends may not immediately repatriate the funds, as they might reinvest in the Taiwan stock market, thus not necessarily exerting depreciation pressure on the New Taiwan Dollar.

Addressing market concerns about 'four loans at once'—where investors borrow from multiple financial institutions—Yang stated, 'Banks would not allow clients to do this; it's unlikely unless the individual is extremely wealthy.' He explained that the Credit Information Center monitors creditworthiness and borrowing limits, and the central bank is closely watching credit expansion, advising the public against over-leveraging.

Yang also mentioned that the Financial Supervisory Commission plans to allow listed and OTC companies to distribute cash dividends in U.S. dollars, with implementation expected by 2027. If adopted by major domestic firms, this could help reduce volatility in the New Taiwan Dollar.

Currently in the traditional dividend season (July–August) for Taiwan stocks, there are concerns that foreign investors repatriating dividends could pressure the currency. However, Yang suggested that foreign investors might reinvest the proceeds back into the local market, mitigating FX market pressure.

On inflation, Yang noted that while uncertainties around U.S.-Iran tensions remain, oil prices have returned to pre-conflict levels, easing imported inflation pressures. He added that domestic inflation remains relatively mild compared to other major economies.