Taiwan Dollar Surges 5% in a Day, Largest Gain Since 1980s, Amid U.S. Trade Speculation

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Updated May 7, 2025, 02:01 AM

The Taiwan dollar experienced a historic surge, appreciating by as much as 5% in a single day, marking its largest intraday gain since the 1980s. This rally was driven by exporters and life insurers rushing to convert their U.S. dollar holdings into the local currency, amid speculation that Taiwan might be allowing its currency to strengthen ahead of trade negotiations with the U.S. The Taiwan dollar has risen 9.7% in May and 12.9% since April, reaching NT$29.4602 to US$1 on May 6, up from NT$33.2464 to US$1 on April 1. The surge in the Taiwan dollar has led to significant market speculation about its implications for U.S.-Taiwan trade relations. Despite the central bank's denial of any U.S. request for a stronger Taiwan dollar, market observers believe that the currency's appreciation could be part of a broader strategy to secure trade concessions from the U.S. Taiwan life insurers, holding foreign assets worth 7,670 billion USD, have been particularly active in this currency conversion, potentially due to concerns over their under-hedged U.S. dollar positions. The rapid appreciation of the Taiwan dollar has also raised concerns about potential impacts on the island's export-heavy tech sector, as a stronger local currency could reduce the competitiveness of Taiwanese goods on the global market. This situation is being closely watched by USD-rich Asian countries, which may be considering similar moves.

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