The extent of the recent appreciation of the Taiwanese dollar has really shocked a lot of people. I took a careful look at the recent exchange-rate trend and found that within just two trading days, the Taiwanese dollar surged by nearly 10%—which is truly rare among Asian currencies. Last spring, the TWD versus the US dollar jumped by 5% in a single day, setting a 40-year record for the largest one-day increase, and it even briefly broke through the 30 mark, hitting a low of 29.59. By comparison, the Japanese yen rose by 8.47%, the Korean won by 7.17%, and the Taiwanese dollar by 8.74%—so everyone was rising.

I think there are several key factors behind this rally. First is the impact of US tariff policy. When Trump announced a 90-day delay in implementing reciprocal tariffs, the market expected Taiwan’s exports to benefit in the short term, bringing a large influx of foreign capital that pushed the Taiwanese dollar higher. Second, Taiwan’s central bank is in a dilemma—it needs to stabilize the exchange market, but it also worries about being listed as a currency manipulator, which limits the central bank’s intervention space. In addition, large-scale hedging actions by Taiwan’s insurance industry and companies, as well as the concentrated unwinding of New Taiwan dollar financing arbitrage trades, further amplify exchange-rate volatility.

From the valuation perspective, based on the Bank for International Settlements’ real effective exchange rate index, the US dollar index is about 113 and appears overvalued, while the TWD index is around 96, which is reasonably undervalued. If you extend the observation period from the beginning of the year to today, the amount of TWD appreciation is actually in line with the performance of regional currencies, and it’s not as outrageous as people might imagine. As for whether the TWD is appreciating or depreciating today, it depends on the US-Taiwan trade negotiations and the central bank’s policy direction—both of which will directly affect the outlook going forward.

The market generally believes that the chance of the TWD rising to 28 is extremely slim. Most industry insiders expect the TWD to fluctuate in a range between 30 and 30.5. If you want to take advantage of this volatility opportunity, I recommend that beginners start by testing with small amounts—definitely don’t impulsively add more. For long-term investing, Taiwan’s economic fundamentals are solid, and semiconductor exports are strong; the Taiwanese dollar is relatively strong. However, foreign-exchange positions should be kept within 5%-10% of total assets, and the remaining money should be diversified into other global assets. When trading USD versus TWD with leverage, remember to set a stop-loss to protect yourself. Many forex trading platforms offer demo accounts, so you can practice and test strategies first. The key is to keep a close eye on the central bank’s actions and the latest developments in US-Taiwan trade, as these will directly influence the future exchange-rate trajectory.