The TWD appreciation wave: 31.4-level is no longer far away

The New Taiwan Dollar has been a bit “hot” recently! Yesterday, the exchange rate once touched 31.405 yuan, an increase of 4.2 points. What secrets are hidden behind this strong rebound?

The US Dollar Trend Turns, Asia Gets a Breather

The good days for the US dollar seem to be over. As Federal Reserve officials signal a dovish stance, market expectations for a rate cut in December have clearly increased, causing the US Dollar Index to fall back to around 100.16. This shift not only affects the New Taiwan Dollar but also causes major Asian currencies like the Yen and Korean Won to rebound collectively, forming a rare window for Asian currency appreciation.

Stocks and Forex Strengthen Simultaneously, Beneficiary Stocks of the TWD Rise

Yesterday, Taiwan stocks surged led by electronics heavyweight stocks, and the New Taiwan Dollar exchange rate also rose accordingly. In fact, the correlation between Taiwan stocks and the New Taiwan Dollar is no coincidence—rising stocks attract continuous foreign capital inflows, and exporters’ actual dollar-selling demand at the end of the month further drives the strong appreciation of the TWD. After opening at 31.42 yuan in the morning, it immediately rose above 31.405 yuan, with market sentiment clearly improving. The performance of stocks benefiting from this TWD appreciation is also worth noting; many electronics and traditional industry stocks focused on exports are expected to benefit from exchange rate optimization.

Limited Room for Appreciation, US Dollar Pattern Remains a Key Variable

However, while optimism persists, caution is necessary. Although the short-term rebound of the New Taiwan Dollar is impressive, the US Dollar Index remains above 100, and the global dollar pattern remains strong. This means the TWD’s appreciation potential is not unlimited; the current consolidation around 31.415 yuan already reflects the market’s equilibrium point. Analysts believe that the future trend will still depend on foreign capital flows and changes in the strength of the US dollar.

Can the Two Main Drivers Continue? That’s the Key

This wave of TWD rebound is mainly driven by two forces: first, the renewed expectation of Fed rate cuts, which puts pressure on the dollar; second, Taiwan stock performance attracting hot money back into the market. If these two momentum sources continue, the TWD may challenge a stronger support level at 31.3 yuan. However, many market variables remain, such as US economic data and China’s economic outlook, which could change the situation. Investors and traders need to keep monitoring.

Practical Advice: Exporters and Importers Have Different Strategies

According to banking and forex experts, exporters can consider selling dollars around 31.4 yuan to lock in profits; importers might patiently wait for a pullback opportunity to re-enter. This differentiated strategy reflects the market’s ongoing uncertainty about the future exchange rate trend.

The recent strong rebound of the New Taiwan Dollar signals short-term optimism. With hot money inflows and exporters’ dollar-selling demand stacking up, the potential for TWD beneficiaries to appreciate is gradually emerging. Whether the New Taiwan Dollar can stabilize above 31.4 yuan will become an important indicator to watch for the trend of Asian currencies.