U.S. dollar forecast to stay strong on Taipei forex market in H1 2025

Taipei, Dec. 31 (CNA) After soaring 6.24 percent against the Taiwan dollar in 2024, the U.S. dollar is forecast to stay on an uptrend in the first half of 2025 amid concerns over inflation in the United States, dealers said.

On Tuesday, the last trading session of 2024, the greenback recorded an annual rise against the Taiwan dollar of NT$2.046, or 6.24 percent, closing at NT$32.781, the highest for a last trading session since 2015, when the exchange rate was NT$33.066.

This year, the greenback remained strong as inflation concerns led the Federal Reserve to delay a rate cut cycle, dealers said.

Although the Fed started to lower its key interest rates in September, investors rushed to pour their funds into so-called Trump trade, which posits that certain industry sectors and financial assets will benefit from the return of U.S. President-elect Donald Trump to the White House, and continue pushing up the greenback, dealers said.

Chen Yu-chung (陳有忠), chief foreign currency strategist at Taishin International Bank, said as Trump has threatened to raise tariffs, there are concerns that inflationary pressure could increase, prompting the Fed to slow down the pace of rate cuts.

In response to Trump urging investment in the U.S., foreign enterprises are expected to pour money into the U.S. market, Chen said, citing a recent case in which Japanese tech conglomerate SoftBank pledged to invest US$100 billion in the U.S.

These factors are expected to help the U.S. dollar maintain its strength in the first half of next year, referring to the honeymoon effect in the first half year of Trump's second term in office, he added.

However, Trump favors a weaker U.S. dollar so as the U.S. economy is expected to weaken next year, he could come up with measures to allow the currency to trend lower, Chen said.

It is possible the U.S. dollar could see profit taking in the second half of next year after a strong first half of the year, Chen said.

However, the U.S. dollar could challenge the NT$33 mark against the Taiwan dollar in the first half of 2025, dealers said.