Last year, the surge in the Taiwan dollar was truly incredible. I still remember that in just the first few days of May—over the course of two or three days—it abruptly skyrocketed by 10%, breaking the 30 NT dollar mark in one fell swoop and delivering the strongest single-day rise in 40 years. At the time, the market was still worried that the Taiwan dollar would weaken to 34 or 35 per dollar, but the situation flipped around right away—it was honestly hard to believe.

Later, when I looked into it more carefully, I found that the main driver behind this Taiwan dollar rally was the tariff policies triggered by Trump. At the time, when he announced a 90-day delay in implementing tariffs, the market immediately expected a surge in bulk purchasing. Taiwan’s exports benefited in the short term, and on top of that, the IMF unexpectedly raised its forecast for Taiwan’s economic growth. Foreign capital then rushed in aggressively—this was the main momentum behind the Taiwan dollar’s rise. But to be frank, the central bank was stuck in a dilemma: on one side, it worried about being singled out by the U.S. as a currency manipulator; on the other, it had to deal with the pressure from Taiwan dollar appreciation.

Interestingly, a UBS report noted that large-scale hedging operations by Taiwan’s insurance firms and companies, along with closing out Taiwan dollar financing arbitrage trades, actually amplified the magnitude of short-term volatility. Back then, insurance companies held as much as 1.7 trillion USD in overseas assets and lacked sufficient hedging. Once panic set in, it was easy to trigger a chain reaction.

From a long-term perspective, the Taiwan dollar is still relatively strong. My own observation is that over the past decade, the Taiwan dollar vs. the U.S. dollar has mostly been range-bound between about 27 and 34, and the amount of fluctuation isn’t particularly large. Compared with the wild swings of the Japanese yen—moving up or down 50%—the Taiwan dollar has been much more stable. Mainly, it tracks the Federal Reserve’s rate hikes and cuts. During the period of QE liquidity being pumped, the Taiwan dollar surged to 27; later, during the U.S. high-interest cycle, it returned to around 32.

As for investment opportunities: if you’re a seasoned forex trader, you can directly do USD/TWD short-term trades. But if you’re a beginner, you really need to be cautious—test the waters with a small amount first, and absolutely don’t impulsively add more. For long-term investing, the Taiwan dollar may be in a band of around 30 to 30.5, but remember to keep your forex positions within 5-10% of your total assets, and then diversify the rest into other assets. Also, be sure to set stop-losses and keep an eye on the central bank’s actions and the progress of U.S.-Taiwan trade—these will directly affect the exchange rate. Based on my experience, when the rate is below 1 to 30, you can consider buying USD; when it’s above 32, you should sell. Those are basically the market’s psychological price levels.