A widely used arbitrage play involving Taiwan Semiconductor Manufacturing Co. has started paying off in a big way thanks to the unprecedented surge in the Taiwan dollar.

TSMC trades at a premium in the U.S. to its local listing.

The premium of U.S.-listed American depository receipts to the domestically-listed stock, as wide as 34% in April, has shrunk to just 12%.

Shorting the ADR and going long the domestic stock has been a tempting and popular strategy for hedge funds, says a trader at a U.K.-based hedge fund who estimates the size of the trades to be roughly $500 million.

This premium has ranged between 5% and 30% in the last five years. The surge of the Taiwanese dollar is recent days reduces the premium as the value of the local shares rises in comparison with the ADRs.

A variety of reasons inform this premium, from regulatory hurdles to different investor bases.

Taiwan Semi is a very popular tech play for U.S. retail investors, attracted first as a vehicle to exploit the success of Apple’s iPhone and now from Nvidia’s dominance of the artificial intelligence revolution. The stock has doubled in two years and tripled in the last five. U.S. investors can’t or won’t access the exchange in Taipei and also prefer the ubiquity of tech ETFs that hold the ADRs.

For dedicated emerging-market investors, the Taipei exchange is more accessible. Taiwan Semi is the largest stock in the MSCI emerging-markets index with an almost 9% weighting, emerging-markets funds can buy either listing.

With daily turnover in New York of $3 billion, TSMC is beloved of U.S. retail investors and emerging market investors alike.

In Taipei, however, the daily volume is roughly $500 million.

Many Taiwanese funds holding local shares have portfolio limits on the concentration of stocks, and few will replicate the 30% TSE index weighting. Also, retail investors in Taiwan are discouraged by a minimum lot size of 1,000 shares per transaction, costing about $31,000.

The surge in Taiwan’s dollar would normally draw Taiwan’s central bank to intervene, but at this delicate stage in trade and tariff negotiations, it is reluctant to be seen manufacturing Taiwan dollar weakness. Taiwan cannot afford to antagonize its most powerful backer in its fight to remain independent.