Taiwan regulator open to more onshore insurer FX hedging

Taiwan’s central bank has suggested it is considering allowing domestic life insurers to access the onshore foreign exchange swap market to hedge dividend risks from their investments. However, some warn the move may reduce liquidity in the non-deliverable forward (NDF) market.

The insurers use swaps to hedge the bulk of the FX risk from their overseas investments, but regulations prevent them from using the same market to top up hedges to cover foreign currency dividend payments, sending them