The USD to TWD exchange rate has recently seen a complex interplay of factors influencing its movement, with the USD benefiting from a hawkish stance by the Federal Reserve. As of October 2023, the USD was bolstered by anticipation of additional rate cuts not being a certainty, following Fed Chair Jerome Powell's comments after the last monetary policy announcement. Analysts expect that forthcoming speeches from various Fed policymakers could provide further direction for the USD, potentially propelling it higher, especially if a consensus towards a more hawkish outlook emerges.
In the context of the TWD, it is important to note that Taiwan's central bank has revised its economic growth forecast upwards, now predicting a 4.55% growth rate for 2025, largely driven by strong export performance in AI-related semiconductors. The central bank has kept interest rates steady at 2%, which aligns with market expectations. This stable monetary policy is amidst concerns regarding the TWD's strength and its impact on export competitiveness, particularly for major companies like TSMC, which have been facing pressures from the TWD's appreciation.
Recent currency trends show the USD trading at 30.80 TWD, approximately 1.3% above the three-month average of 30.39 TWD, indicating stability within a 3.8% range. Forecasters at Bank of America have suggested that the TWD may continue to appreciate against the USD in the latter half of 2025, citing robust exports and corporate hedging as key factors.
In summary, the USD is poised for potential strengthening amidst a shifting Fed policy landscape, while the TWD's future trajectory may be influenced by Taiwan's economic resilience and concerns among exporters regarding currency strength. This dynamic underscores the importance for individuals and businesses engaged in international transactions to stay vigilant and informed of current market factors influencing the USD to TWD exchange rate.
