TSMC unit to issue US$10 billion of stock to counter forex swings
TSMC Global is poised to issue the shares to help it hedge against forex swings, the company said in a statement. It's the third such deal since 2024, and by far the largest. They occurred during periods when the Taiwan dollar tended to appreciate. The moves grant TSMC Global – the vehicle responsible for managing overseas investments and hedging – more capital flexibility in managing exchange rate risks.
Recent gains by the Taiwan dollar have caused worries in Taipei about the economy's heavy reliance on exports. In May, the currency notched its biggest single-day gain since the 1980s, spurring calls from the central bank to curb speculation.
'Generally speaking, the heightened forex volatility would mean that banks may be adjusting their margin requirements,' said Philip McNicholas, Asia sovereign strategist at Robeco based in Singapore. 'Issuing new shares, and bringing in an immediate cash injection, may help companies manage the margin requirements on both existing and new hedges.'
TSMC, the main chipmaker to Apple and Nvidia, is by far the island's biggest company and exporter because the majority of its production is domestic. A stronger Taiwan dollar hurts exporters because the US dollars they earn from sales abroad would translate into less of the local currency, or they would need to raise their prices overseas and risk denting demand.
In June, chief executive officer CC Wei told shareholders the company's operating margin has fallen several percentage points because of a stronger local currency. BLOOMBERG
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Times
2 hours ago
- Business Times
Domestic demand drives Malaysia's Q2 GDP up 4.4% amid export slump
[KUALA LUMPUR] Malaysia's domestic demand shielded the economy from a sharper slowdown in the second quarter, and helped deliver a 4.4 per cent year-on-year growth – despite tumbling net exports and the current account surplus being at its smallest in over 20 years. The April-to-June performance announced by Bank Negara Malaysia on Friday (Aug 15) fell just shy of the 4.5 per cent growth forecast by economists in a recent Reuters poll, as well as the advance estimates from the Department of Statistics Malaysia (DOSM). DOSM chief statistician Mohd Uzir Mahidin attributed the economic growth to several key factors, including continued consumer spending, a resilient labour market and sustained trade activity. He noted that the US-China tariff truce had lifted exports in the region's economies, and that moderating inflation at home and abroad had supported purchasing power. Between April and June, Malaysia's private consumption rose 5.3 per cent year on year; public consumption went up by 6.4 per cent, also on the year. Net exports dropped over 70% Lower oil and gas production, the result of planned maintenance activities, was a factor that weighed on Malaysia's economic growth in Q2. PHOTO: BLOOMBERG Despite strong electrical and electronics exports, the overall trade balance weakened. Net exports plunged by 72.6 per cent, dragged down by a decline in mining-related exports and a rise in capital imports. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up Mohd Uzir noted: 'Lower oil and gas production due to planned maintenance activities was a factor that weighed on growth in the second quarter.' He added that slower exports were exacerbated by waning support from front-loading activities; however, the continued demand for electrical and electronics products and robust tourism activities would support export growth going forward, he said. Overall growth was weighed down by the mining sector's decline amid lower commodity production, said Bank Negara governor Abdul Rasheed Ghaffour. Malaysia's current-account surplus for the quarter narrowed to RM300 million (S$91.3 million), the smallest in 26 years. The goods account surplus narrowed sharply to RM17 billion, while the services account deficit edged up to RM3.3 billion. Lingering uncertainties Bank Negara Malaysia governor Abdul Rasheed Ghaffour said the country's overall economic growth was weighed down by the mining sector's decline amid lower commodity production. PHOTO: BANK NEGARA MALAYSIA The governor, expressing cautious optimism about Malaysia's economic outlook, said that the country is on a 'solid footing', ready to face future headwinds, even as front-loading normalises. He acknowledged that persistent external challenges, especially the lingering tariff uncertainties, could take time to play out, but that the country is approaching these challenges from a position of strength. The governor highlighted that the economy is underpinned by resilient domestic demand, ongoing electrical and electronics sector growth, and a diversified export base. 'These fundamentals, together with continued structural reforms, ensure Malaysia is well-positioned to navigate the evolving global landscape,' he explained. Last month, Bank Negara lowered the economic forecast range to between 4 and 4.8 per cent for 2025, down from its estimate in March of 4.5 to 5.5 per cent. The revision of economic forecasts is a nod to the rising uncertainty over US trade tariffs, shifting trade alliances and geopolitical instability – all of which are factors weighing on the outlook for the region's export-reliant economies. Economists' 2025 growth forecast: between 4.1% and 4.4% Bank Negara's monetary policies, coupled with the Malaysian government's RM2 billion in Merdeka cash handouts, are expected to boost domestic spending. PHOTO: AFP Mohd Afzanizam Abdul Rashid, Bank Muamalat's chief economist, projects that Malaysia's economy will grow more slowly in the second half of 2025, and come in at between 3.7 and 3.8 per cent; the full-year growth rate would be around 4.1 per cent. He highlighted that Bank Negara has been proactive with its monetary policy, having cut the statutory reserve requirement and the overnight policy rate earlier this year. 'These measures, along with RM2 billion in Merdeka cash handouts, are expected to boost domestic demand and counteract the looming risks of a global slowdown,' he told The Business Times. ANZ Research economists Arindam Chakraborty and Khoon Goh noted that external demand is expected to weaken, but that overall growth should remain supported by resilience in domestic demand and a sustained momentum in investment. The research firm forecasts Malaysia's GDP to expand at 4.1 per cent in 2025. Regarding monetary policy, the ANZ Research economists do not expect another rate cut unless weaker external demand significantly affects incomes and consumption. RHB Bank senior economist Chin Yee Sian has a slightly more positive outlook on the country's economic growth, forecasting a 4.2 per cent GDP expansion, with potential to reach 4.4 per cent. She notes that the outcome hinges on external factors such as clearer guidance on US tariffs, easing US-China tensions, as well as the impact of the domestic stimulus measures. Chin added that some domestically-focused industries remain resilient to global uncertainties because they are insulated by strong local demand; these sectors are retail, consumer goods, and construction. Ringgit gains In Q2, the Malaysian currency had appreciated by 5.9 per cent against the US dollar as at Aug 13. On a nominal effective exchange rate basis, the ringgit rose by 2.1 per cent. As at 4 pm on Friday, the ringgit was trading at 4.2184 against the greenback, nearly 5.7 per cent higher than the RM4.4715 level at the start of the year. Against the Singapore dollar, it depreciated around 0.5 per cent to 3.2893, from RM3.2742 on Jan 1. Commenting on the currency's movement, Abdul Rasheed said that he expected the ringgit to continue being influenced by external factors, but that its value would be supported by Malaysia's favourable economic outlook, structural reforms, and ongoing efforts to encourage capital inflows. Moderate inflation Lower inflation for fuel and food-related items was partially balanced by a smaller decrease in mobile service prices. BT FILE Between April and June, the headline inflation eased to 1.3 per cent. Its core inflation remained broadly stable, at 1.8 per cent. The governor said that the lower inflation for fuel and food-related items were partly offset by a slower decline in prices for mobile services. Abdul Rasheed expects inflation to remain moderate in 2025, and projects headline inflation to average between 1.5 and 2.3 per cent. The headline inflation forecast range for the year was revised down, following the more moderate demand and cost outlook of the earlier projections in March 2025. 'Inflationary pressure from global commodity prices is expected to remain limited, contributing to moderate domestic cost conditions. In this environment, the impact of domestic policy measures on inflation is expected to remain contained,' he added.
Business Times
4 hours ago
- Business Times
Domestic demand powers Malaysia's Q2 GDP up 4.4% amid export slump
[KUALA LUMPUR] Malaysia's domestic demand shielded the economy from a sharper slowdown in the second quarter, and helped deliver a 4.4 per cent year-on-year growth – despite tumbling net exports and the current account surplus being at its smallest in over 20 years. The April-to-June performance announced by Bank Negara Malaysia on Friday (Aug 15) fell just shy of the 4.5 per cent growth forecast by economists in a recent Reuters poll, as well as the advance estimates from the Department of Statistics Malaysia (DOSM). DOSM chief statistician Mohd Uzir Mahidin attributed the economic growth to several key factors, including continued consumer spending, a resilient labour market and sustained trade activity. He noted that the US-China tariff truce had lifted exports in the region's economies, and that moderating inflation at home and abroad had supported purchasing power. Between April and June, Malaysia's private consumption rose 5.3 per cent year on year; public consumption went up by 6.4 per cent, also on the year. Net exports dropped over 70% Lower oil and gas production, the result of planned maintenance activities, was a factor that weighed on Malaysia's economic growth in the second quarter. PHOTO: BLOOMBERG Despite strong electrical and electronics exports, the overall trade balance weakened. Net exports plunged by 72.6 per cent, dragged down by a decline in mining-related exports and a rise in capital imports. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up Mohd Uzir said: 'Lower oil and gas production due to planned maintenance activities was a factor that weighed on growth in the second quarter.' He added that slower exports were exacerbated by waning support from front-loading activities; however, the continued demand for electrical and electronics products and robust tourism activities would support export growth going forward, he said. Overall growth was weighed down by the mining sector's decline amid lower commodity production, said Bank Negara governor Abdul Rasheed Ghaffour. Malaysia's current-account surplus for the quarter narrowed to RM300 million (S$91.3 million), the smallest in 26 years. The goods account surplus narrowed sharply to RM17 billion, while the services account deficit edged up to RM3.3 billion. Lingering uncertainties Bank Negara Malaysia governor Abdul Rasheed Ghaffour said the country's overall economic growth was weighed down by the mining sector's decline amid lower commodity production. PHOTO: BANK NEGARA MALAYSIA The governor, expressing cautious optimism about Malaysia's economic outlook, said the country is on a 'solid footing', ready to face future headwinds, even as front-loading normalises. He acknowledged that persistent external challenges, especially the lingering tariff uncertainties, could take time to play out, but that Malaysia is approaching these challenges from a position of strength. The governor highlighted that Malaysia's economy is underpinned by resilient domestic demand, ongoing electrical and electronics sector growth, and a diversified export base. 'These fundamentals, together with continued structural reforms, ensure Malaysia is well-positioned to navigate the evolving global landscape,' he said. Last month, Bank Negara lowered the economic forecast range to between 4 and 4.8 per cent for 2025, down from its estimate in March of 4.5 to 5.5 per cent. The revision of economic forecasts is a nod to the rising uncertainty over US trade tariffs, shifting trade alliances and geopolitical instability – all of which are factors weighing on the outlook for the region's export-reliant economies. Economists' 2025 growth forecast: between 4.1% and 4.4% Bank Negara's monetary policies, coupled with the Malaysian government's RM2 billion in Merdeka cash handouts, are expected to boost domestic spending. PHOTO: AFP Bank Muamalat's chief economist, Mohd Afzanizam Abdul Rashid, projects that Malaysia's economy will grow more slowly in the second half of 2025, and come in at between 3.7 and 3.8 per cent; the full-year growth rate would be around 4.1 per cent. He highlighted that Bank Negara has been proactive with its monetary policy, having cut the statutory reserve requirement and the overnight policy rate earlier this year. 'These measures, along with RM2 billion Merdeka in cash handouts, are expected to boost domestic demand and counteract the looming risks of a global slowdown,' he told The Business Times. ANZ Research economists Arindam Chakraborty and Khoon Goh noted that external demand is expected to weaken, but that overall growth should remain supported by resilience in domestic demand and a sustained momentum in investment. The research firm forecasts Malaysia's GDP to expand at 4.1 per cent in 2025. Regarding monetary policy, they do not expect another rate cut unless weaker external demand significantly affects incomes and consumption. RHB Bank senior economist Chin Yee Sian has a slightly more positive outlook on Malaysia's economic growth, forecasting a 4.2 per cent GDP expansion, with potential to reach 4.4 per cent. She notes that the outcome hinges on external factors such as clearer guidance on US tariffs, easing US-China tensions, as well as the impact of the domestic stimulus measures. Chin added that some domestically-focused industries remain resilient to global uncertainties because they are insulated by strong local demand; these sectors are retail, consumer goods, and construction. Ringgit gains In the second quarter, Malaysian currency had appreciated by 5.9 per cent against the US dollar as at Aug 13. On a nominal effective exchange rate basis, the ringgit rose by 2.1 per cent. As at 4 pm on Friday, the ringgit traded at 4.2184 against the greenback, nearly 5.7 per cent higher than the RM4.4715 level at the start of the year. Against the Singapore dollar, it depreciated around 0.5 per cent to 3.2893, from RM3.2742 on Jan 1. Commenting on the currency's movement, Abdul Rasheed said he expected the ringgit to continue being influenced by external factors, but that its value would be supported by Malaysia's favourable economic outlook, structural reforms, and ongoing efforts to encourage capital inflows. Moderate inflation Lower inflation for fuel and food-related items was partially balanced by a smaller decrease in mobile service prices. BT FILE Between April and June, Malaysia's headline inflation eased to 1.3 per cent. Its core inflation remained broadly stable, at 1.8 per cent. The governor said the lower inflation for fuel and food-related items were partly offset by a slower decline in prices for mobile services. Abdul Rasheed expects inflation to remain moderate in 2025, projecting headline inflation to average between 1.5 and 2.3 per cent. The headline inflation forecast range for the year was revised down, following the more moderate demand and cost outlook of the earlier projections in March 2025. 'Inflationary pressure from global commodity prices is expected to remain limited, contributing to moderate domestic cost conditions. In this environment, the impact of domestic policy measures on inflation is expected to remain contained,' he added.
CNA
5 hours ago
- CNA
Dollar slips before US data, eyes on Trump-Putin meeting
The U.S. dollar slipped on Friday as investors remained cautious about the rate outlook ahead of import price data, after recent figures suggested inflation could accelerate in the coming months. The yen outperformed the euro and the pound after surprising strong Japanese growth data which showed export volumes held up well against new U.S. tariffs. All eyes will be on a meeting in Alaska later on Friday between U.S. President Donald Trump and his Russian counterpart Vladimir Putin, though hopes of sealing a ceasefire agreement on Ukraine remain uncertain. U.S. import price figures will be more closely watched than usual after data on Thursday showed a surprisingly sharp jump in U.S. producer prices last month, pushing the dollar higher. If import prices keep rising, it may signal that U.S. companies are fully absorbing the tariffs, leaving them with two options: pass the costs on to consumers, potentially stoking inflation, or take the hit to profit margins. Money markets reflect a 95 per cent chance of a 25-basis point Fed rate cut in September. They fully priced a 25-bp cut and a 5 per cent chance of a larger 50-bp move before Thursday's U.S. data. Markets also await next week's Jackson Hole symposium for clues on the Fed's next move. Signs of weakness in the U.S. labour market combined with inflation from trade tariffs could present a dilemma for the Fed's rate cut trajectory. The yen was up 0.4 per cent against the dollar at 147.20, helped by data showing Japan's economy grew much faster than expected in the second quarter. U.S. Treasury Secretary Scott Bessent's remarks earlier this week that the Bank of Japan could be "behind the curve" in dealing with the risk of inflation proved to be another tailwind for the yen. "Although BoJ Governor Ueda, may choose to disregard Bessent's remarks, the Japanese authorities will not want the value of the yen to become more of a concern to the Trump administration than it already is," said Jane Foley senior forex strategist at RaboBank. The euro rose 0.25 per cent versus the dollar to $1.1675. Most analysts expect Europe's single currency to benefit from any ceasefire deal in Ukraine. "The Trump-Putin meeting and any better clarity on the path ahead in the Ukraine conflict have longer-lasting implications for the euro than for the dollar," said Francesco Pesole, forex strategist at ING. "There is a chance that today might be the first step in the direction of de-escalation, and markets may tread carefully for now," he added. The pound was up 0.20 per cent against the U.S. currency at $1.3553. The Australian dollar was up 0.2 per cent versus the greenback at 0.6508. The Chinese yuan pulled back from a two-week high as weaker-than-expected economic readings weighed on sentiment.
