A sharp rise in insurance sales in Taiwan is fuelling concerns over increased capital outflows, which could push the New Taiwan dollar to levels last seen during the global financial crisis, reported the Taipei Times.
Insurance policy sales in Taiwan surpassed NT$100bn ($3.05bn) in December last year, marking the highest monthly total since January 2022, according to data released by Taiwan’s Insurance Institute.
The surge in demand was largely driven by the higher returns these policies offer compared to foreign-currency deposits at banks.
Analysts are worried that Taiwan’s NT$1tn life insurance industry, which has been increasing investments in overseas assets due to the limited availability of high-yield fixed-income options domestically, may further accelerate these investments.
This shift could lead to significant capital outflows, putting downward pressure on the NT dollar.
The NT dollar is already weakening due to the threat of a global trade war and the nation’s large interest-rate discount to the US.