Taiwan’s Central Bank Wards Off FX Speculators Piling Into ETFs

Taiwan told foreign investors to exit bets on the local dollar taken through exchange-traded funds, as a 12% gain in its currency threatens its export-reliant economy.

The strategy involves investors buying the island’s ETFs and inverse ETFs, allowing them to accumulate holdings of Taiwan dollars while maintaining a neutral position in the stock market. Foreign funds have been “repeatedly” deploying this playbook to speculate on the currency, according to Deputy Central Bank Governor Yen Tsung-ta.

A sign of the ballooning currency bets can be seen in how foreign holdings of Taiwan’s biggest inverse stock ETF had surged to 914.7 ...