TWD keeps rising, TSMC raises 10 billion USD through overseas capital increase to drop forex hedging costs.

In the past three months, the Taiwan dollar has appreciated by as much as 12%. TSMC President Wei Zhejia clearly pointed out at the shareholders' meeting in June that for every 1% appreciation of the New Taiwan dollar, TSMC's gross profit margin will decrease by about 0.4 percentage points. Therefore, TSMC's overseas subsidiary TSMC Global Ltd. will issue new shares worth 10 billion USD to drop its forex hedging costs.

Important Role of TSMC in Overseas Financial Operations: TSMC Global

TSMC Global Ltd. is a wholly-owned subsidiary of TSMC dedicated to handling overseas financial operations, with its financial strategy centered around three main aspects: forex hedging, flexible fund mobilization, and optimization of capital structure.

Due to TSMC's substantial revenue coming from overseas clients who are priced in US dollars, but costs mostly priced in New Taiwan dollars, exchange rate fluctuations will directly affect the gross profit margin. TSMC's President, Wei Zhejia, clearly stated at the shareholder meeting in June 2025 that for every 1% appreciation of the New Taiwan dollar, TSMC's gross profit margin will decline by approximately 0.4 percentage points.

In addition, TSMC Global will also invest in US dollar-denominated bonds and short-term bills to enhance asset returns. It will serve as an internal capital allocation platform for the group, assisting overseas subsidiaries with capital allocation and reinvestment.

TSMC is issuing new shares valued at 10 billion USD in response to forex fluctuations.

According to a Bloomberg report, TSMC Global will issue new shares worth $10 billion to support its forex hedging business.

This is the third such transaction since 2024 and the largest one to date. These transactions occurred during a period when the New Taiwan Dollar was appreciating. This move gives TSMC Global greater capital flexibility to manage forex risk.

The New Taiwan Dollar has appreciated by 12% in the past three months, becoming a market mechanism.

According to the analysis charts from Finance M Square, the New Taiwan Dollar has appreciated by 12.35% over the past three months, ranking first in the world, far exceeding the 7.79% of the Korean Won and the 4.01% of the Japanese Yen.

Central Bank Governor Yang Jinlong has repeatedly stated that the appreciation of the New Taiwan Dollar is a reflection of market mechanisms, rather than intentional manipulation by the central bank. It is neither a request from the United States nor a result of any monetary agreement between Taiwan and the U.S., and he refuted rumors regarding the so-called "Mar-a-Lago Agreement." He emphasized that Taiwan has not been listed as a currency manipulator and that the central bank has not participated in any appreciation negotiations.

However, in the face of the appreciation of the New Taiwan Dollar, the central bank also reminds market commentators and the media not to speculate when commenting on domestic forex-related issues or making intuitive predictions about exchange rates, in order to avoid affecting the order and stability of the domestic forex market and even impacting the real economy.

The US dollar to New Taiwan dollar (USDTWD) touched the important level of 29 last week, and before the deadline, it reported at 29.260.

This article discusses how the New Taiwan Dollar keeps rising, and TSMC lowers forex hedging costs by raising 10 billion USD overseas. It first appeared on Chain News ABMedia.