The recent performance of the New Taiwan dollar has been truly amazing—within just a few days, it surged by nearly 10%, breaking through the 30 NT dollar level. I carefully reviewed market data: in the early days of May, the New Taiwan dollar against the U.S. dollar saw a daily jump of 5%, marking the largest single-day increase in 40 years. This bout of market momentum is indeed unusual.

The logic behind it is actually quite clear. First, Trump announced a delay in the tariff policy, and the market immediately began to expect a surge in global centralized purchasing. As a major export economy, Taiwan naturally benefited—foreign capital flooded in, driving the New Taiwan dollar higher. Second, the central bank is in a dilemma. The U.S. Treasury Department has listed “currency intervention” as a key item for review, making it difficult for the central bank to intervene in the FX market as forcefully as it has in the past. On top of that, Taiwan’s insurance industry and exporters carried out large-scale hedging operations, further amplifying volatility.

According to UBS’s analysis, the New Taiwan dollar shifted from being modestly undervalued to being relatively overvalued. Meanwhile, the foreign exchange derivatives market indicates “the strongest appreciation expectation in five years.” But interestingly, if you look at the longer term, from the beginning of the year to now, the New Taiwan dollar is up 8.74%, the Japanese yen is up 8.47%, and the Korean won is up 7.17%—in fact, everyone is rising. Based on the BIS real effective exchange rate index, the U.S. dollar index is about 113, suggesting it is overvalued, while the New Taiwan dollar index staying around 96 is considered reasonably undervalued.

Most people in the industry judge that the chance of the New Taiwan dollar rising to 28 is extremely slim. UBS expects that when the New Taiwan dollar trade-weighted index rises another 3%, the central bank may step up its intervention. Historically, over the past decade, the New Taiwan dollar against the U.S. dollar has traded in a range of 27 to 34, which is relatively small compared with global currency fluctuations. The ups and downs of the New Taiwan dollar mainly depend on the Federal Reserve’s interest rate hike or cut direction, rather than Taiwan’s central bank. A benchmark that many people use in their minds is 30—U.S. dollars priced below 1:30 are considered “buyable,” while those above 32 should be “sold.”

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