Outlook
The TWD is seen staying in a narrow range in the near term, with the central bank keeping a non-intervention stance and markets driving moves. Renewed optimism around US-China trade talks has supported inflows into Taiwan, potentially offering modest TWD strength if this continues. However, exporters face margin risk if the currency strengthens further, and life insurers with USD-denominated assets may face higher hedging costs, which could cap gains. A shift in global risk sentiment or trade dynamics could quickly alter the balance.
Key drivers
- Renewed optimism on US-China trade talks driving capital inflows into Taiwan, supporting activity and the TWD. (HubTrading)
- Central Bank stance: non-intervention with market-determined moves, signaling resilience but exposing exporters to currency swings. (TVBS)
- Sector implications: volatility pressures on exporters and higher hedging costs for insurers with USD exposures. (CIER, The Asset)
- Broader risk environment: global growth and risk appetite will influence flows into Taiwan and the currency’s directional bias. (Markets)
Range
TWD/USD: 0.031569–0.032712 (7-day range; current near 0.031896)
TWD/EUR: 0.026598–0.028151 (14-day range; current near 0.026864)
TWD/GBP: 0.023091–0.024829 (14-day range; current near 0.023415)
TWD/JPY: 4.8782–5.0545 (7-day range; current near 4.8865)
What could change it
- Sustained progress in US-China trade talks and continued capital inflows into Taiwan.
- Any unexpected shift in Taiwan’s policy stance or new guidance from the central bank.
- Changes in global risk appetite or a shift in the external environment affecting exporters and hedging costs.
- Material information on insurers’ USD-asset hedging requirements and profitability pressures.
