Recently, while watching the currency market, I found that the Taiwanese dollar's strength is really quite fierce. I still have a pretty deep impression of the rally last May. In just two or three trading days, it surged nearly 10%, with even a single-day jump of 5%, which is rare in the past 40 years. At that time, the market was worried that the TWD would depreciate to 34 or 35 yuan, but it turned around and broke through the 30 yuan mark, with the lowest even reaching 29.59 yuan, a truly dramatic reversal.

Back then, analysts generally believed that Trump's tariff policies ignited the fuse. After announcing a 90-day delay in implementing reciprocal tariffs, the market immediately anticipated a wave of front-loaded purchasing, and Taiwan, as an export-oriented economy, naturally benefited. Plus, the IMF raised Taiwan's economic growth forecast, and foreign capital started flooding in wildly. Interestingly, the central bank was caught in a dilemma—wanting to stabilize the exchange rate but also afraid of being labeled a currency manipulator by the U.S., so intervention was clearly limited. UBS's research report also pointed out that large-scale hedging operations by insurers and corporations, along with concentrated unwinding of NTD financing arbitrage trades, actually amplified the volatility.

From a valuation perspective, the TWD's strength still has fundamental support. BIS's real effective exchange rate index showed that the TWD was maintained around 96, which is reasonably undervalued, and there was indeed room for appreciation. Moreover, compared to the Japanese Yen and Korean Won, the TWD's gains were quite similar—TWD up 8.74%, Yen up 8.47%, Won up 7.17%, all rising. UBS predicts the TWD will continue to appreciate, but breaking through the 28 yuan level should be very difficult, likely oscillating between 30 and 30.5 yuan.

If you want to follow the trend for short-term trading, my advice is to start with small amounts to test the waters—definitely avoid impulsively adding more. Use low leverage when trading USD/TWD, and always set stop-losses to protect yourself. Beginners can practice with demo accounts to test whether their strategies are feasible. For long-term investing, the TWD's strength is backed by a stable economic foundation and booming semiconductor exports, but foreign exchange positions should ideally be controlled within 5%–10% of total assets. The rest of the funds should be diversified into other assets to reduce risk. Most importantly, keep a close eye on central bank actions and U.S.-Taiwan trade developments, as these will directly influence future trends.