KUALA LUMPUR, Sept 8 (Bernama) -- Bursa Malaysia closed almost flat on Tuesday as buying interest rotated away from index heavyweights towards smaller-cap construction stocks, with sentiment affected by geopolitical uncertainty, said an analyst. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) eased 0.39 of a point to 1,714.40 from Monday’s close of 1,714.79. The benchmark index opened 1.65 points lower at 1,713.14 and moved between 1,710.44 and 1,714.50 throughout the trading session. The broader market was almost evenly balanced, with decliners leading gainers 548 to 546, while 598 counters were unchanged, 1,107 were untraded and 25 were suspended. Turnover expanded to 4.13 billion units valued at RM3.14 billion from 3.60 billion units valued at RM2.45 billion on Monday.
Taiwan Semiconductor Manufacturing Co (TSMC) is doubling down on its currency risk management as foreign exchange (FX) volatility emerges as a major threat to its margins. CFO Wendell Huang said Friday that the company will constantly review and adjust its hedging strategies to offset the impact of a surging Taiwan dollar.
🗣️ “FX is a big uncertainty we cannot control,” said Huang. “But we’ve managed to sustain profitability in the past by leveraging other operational factors—and that’s what we aim to continue doing.”
A Multi-Pronged FX Hedging Approach
TSMC’s strategy includes:
Selling USD in the spot market
Using forward contracts
Moving US dollar cash holdings into an offshore holding company with USD-denominated financials
This approach is meant to buffer against currency swings that could otherwise erode earnings. The company’s recent Q2 earnings beat and upward revision of 2025 revenue guidance underscore its strong fundamentals, largely fueled by global AI-driven chip demand.
FX Impact Looms Larger in Q3
Despite strong topline performance, TSMC warned during its earnings call that Q3 margins may take a bigger hit due to the Taiwan dollar’s continued rally—up more than 11% YTD versus the greenback. Huang noted that every 1% appreciation in the Taiwan dollar could result in a 1% drop in revenue.
To strengthen its currency defenses, TSMC last month announced plans to inject US$10 billion into an overseas unit to support its hedging operations.
Central Bank Takes Action
TSMC isn’t alone in facing FX pressure. Taiwanese exporters and life insurers with exposure to U.S. assets are also feeling the pinch. In response, Taiwan’s central bank has:
Intervened in currency markets
Issued warnings against speculative trading
Sought feedback on a plan to tighten currency purchases by foreign stock investors, according to Bloomberg sources
Key Takeaway:
While AI chip demand continues to fuel TSMC’s revenue outlook, currency volatility remains a key margin risk. With Taiwan's currency surging, TSMC is leaning heavily on its hedging strategy to defend profitability—highlighting the growing importance of FX management in global tech.
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