Taiwanese Dollar Hits Lowest in Over a Year

The Taiwanese dollar depreciated to around 32.2 per US dollar, its weakest level since April 2025, pressured by a stronger US dollar and seasonal capital outflows. The decline erased the currency's gains from last year's rally, which was fueled by optimism over trade relations and strong technology-sector earnings. Selling pressure intensified as companies began distributing annual cash dividends, prompting foreign investors, who hold substantial stakes in Taiwanese chipmakers, to convert dividend proceeds into US dollars. This year's cash distributions are projected to exceed NT$2.5 trillion, the highest on record. Meanwhile, expectations that the Federal Reserve will keep interest rates higher for longer continued to support the US dollar, adding to downside pressure on Taiwan's currency.

The Taiwanese dollar fell past 31.7 per dollar in early March, marking its weakest level since May 2025, as heavy foreign selling of Taiwanese equities added pressure on the currency. Overseas investors recorded around NT$95 billion in net stock outflows on Tuesday, one of the largest withdrawals in more than a year, amplifying risk-off sentiment in both equity and FX markets. At the same time, rising geopolitical tensions in the Middle East boosted demand for the US dollar as a safe haven, while higher oil prices raised concerns about global inflation and the outlook for interest rates, weighing on Asian currencies more broadly. Short-term forwards for USD/TWD were reported above 32, suggesting market expectations of further downside pressure for the Taiwan dollar, while trading volumes surged to levels not seen in years as investors responded to heightened uncertainty.

The Taiwanese dollar fell past 31 per US dollar, returning to its lowest level since early May after sharp swings over the recent two sessions. The currency surged last week following a joint statement from Taiwan’s central bank and the US Treasury, which said they would refrain from intervening in exchange rates or the international monetary system to gain an unfair competitive advantage, and that FX intervention would be used only to manage volatility. In a separate statement, the central bank noted that the US did not request currency appreciation and that the joint statement is unrelated to ongoing tariff negotiations, dispelling speculation that authorities might allow the currency to strengthen to support a trade deal. Meanwhile, Taiwanese officials said talks with the US are nearing conclusion, with local media reporting that both sides have agreed to reduce the previously announced 20% reciprocal tariff.