Dollar Rebounds as Taiwan Dollar Drops to 31.848 Amid Weak Foreign Demand

At the close of the Taipei foreign exchange market today, the US dollar against the New Taiwan Dollar (NTD) exchange rate fell to 31.848, down 0.16 NTD from the previous trading day, with a trading volume reaching 2.629 billion US dollars. This depreciation was more pronounced than the 0.1-NTD decline seen the previous day, indicating that market demand for the NTD continues to weaken. Although the NTD remains within a relatively stable range between 31.7 and 31.9 against the dollar, this decline serves as a reminder to investors that volatility in the foreign exchange market has not completely subsided.

Looking at historical trends, the NTD has been weakening for consecutive days since the end of last year. Last Wednesday, the NTD closed at 31.82 against the US dollar, and falling to 31.848 today represents a decline of about 0.1 NTD compared to 31.70 two weeks ago. Compared with the currencies of major industrialized nations, the US dollar has shown relatively stable trends against the euro and the Japanese yen, whereas the NTD has experienced a larger depreciation, reflecting vulnerability in Taiwan's domestic capital flows and market sentiment. Over the past few months, Taiwan's foreign exchange reserves have remained at approximately 1.5 trillion US dollars. While this amount is ample, market expectations regarding the exchange rate remain sensitive.

Multiple factors have contributed to the depreciation of the NTD. First, the recent acceleration of interest rate hikes by the US Federal Reserve has strengthened the US dollar, driving up global demand for the greenback. Second, global risk sentiment has heightened due to geopolitical tensions and capital outflows from emerging markets, prompting investors to favor safe-haven currencies and putting downward pressure on the NTD and other emerging market currencies. Furthermore, Taiwan's own economic data indicates a slowdown in export growth, particularly as the growth rate of demand in the semiconductor sector has begun to show signs of weakness, further diminishing positive support for the NTD in the foreign exchange market.

This wave of depreciation has brought varying impacts to Taiwan's trade structure and inflation expectations. For export enterprises, a stronger US dollar means enhanced price competitiveness for products in international markets, which may help boost export figures in the short term. However, for import businesses, depreciation will drive up import costs—especially for energy, raw materials, and high-tech equipment—subsequently raising corporate costs and consumer prices. For consumers, although import prices are rising, the depreciation of the NTD may also prompt some domestic enterprises to accelerate production and sales to mitigate foreign exchange risks, providing a certain degree of stimulus to domestic demand.

Faced with exchange rate fluctuations, Taiwan's central bank continues to monitor market dynamics and has not immediately resorted to exchange operations or interest rate adjustments. According to past policy records, if the depreciation persists and exerts clear pressure on inflation, the central bank may consider stabilizing the exchange rate through interest rate hikes or foreign exchange market interventions. Investors and enterprises should continue to closely monitor the policy trajectory of the US Federal Reserve, Taiwan's fiscal and trade data, and changes in global risk sentiment in order to adjust their capital allocation and risk management strategies.

(Fact source: Central News Agency)