Taiwan's Financial Supervisory Commission (FSC) is reportedly considering a proposal that would allow listed companies to distribute dividends in US dollars, a departure from the current requirement of paying out in the local currency. This move is aimed at mitigating foreign exchange costs and short-term volatility for the Taiwan dollar.
Currently, companies with US dollar revenues must convert these funds into Taiwan dollars for dividend distribution, and foreign investors often convert these payments back into US dollars for repatriation. This process creates significant forex activity. The proposed change, if implemented, would lessen the volume of Taiwan dollar conversions, potentially stabilizing the currency.
Sources close to the matter indicate that the FSC is evaluating operational details and the broader regulatory framework, but there is no clear timeline for implementation. It is unlikely that the measure will be in effect before July, which is when most companies issue dividends. The total cash dividends announced by Taiwan-listed companies for fiscal year 2025 amounted to NT$2.2 trillion (approximately $70 billion), with TSMC alone scheduling quarterly distributions of NT$155.6 billion. Foreign investors held about 45% of Taiwan's stock market capitalization last year, making them a significant factor in dividend-related currency movements.
