Taiwan dollar 'rogue wave' rally may hold through H2: Experts

Taipei, June 27 (CNA) The recent surge in the value of the Taiwan dollar, described by some experts as a "rogue wave," is unlikely to ease significantly in the second half of 2025, analysts said Friday.

Lee Chen-yu (李鎮宇), chief economist at Taishin Financial Holding, told CNA that the rally is being driven by strong Taiwanese exports, a weakening U.S. dollar, and growing expectations of deeper Federal Reserve rate cuts in 2026.

"The recent surge of the Taiwan dollar is like a rogue wave, putting considerable pressure on the central bank," Lee said.

Despite a rebound in the U.S. dollar index and weakening momentum among other Asian currencies, the Taiwan dollar continued to strengthen on Friday, closing at NT$28.98 to the U.S. dollar at midday, up NT$0.185.

Forex traders noted that the Taiwan dollar could peak between NT$28.0 and NT$28.5 this year, with Taiwan's central bank actively intervening at key psychological levels.

Lee explained that the rally is supported by robust exports, which have left firms holding large volumes of U.S. dollars.

A slowing U.S. economy, combined with expectations that President Donald Trump may nominate dovish Fed governors, has also contributed to a weaker greenback.

Lee noted that both economic fundamentals and speculative capital are fueling the Taiwan dollar's rise, as global funds flow out of the U.S., adding that the central bank faces the dual challenge of managing market expectations and curbing hot money inflows.

While earlier forecasts predicted the Taiwan dollar would depreciate in the second half of the year due to slowing growth, Lee said resilient exports driven by strong demand for AI-related products and continued orders from U.S. firms could limit any downward pressure on the currency.

National Central University economics professor Dachrahn Wu (吳大任) said much of the current rally stems from a rush in export orders ahead of U.S. tariff measures, forcing exporters to convert large amounts of foreign currency back to Taiwan dollars.

Wu warned that the pace of appreciation could hurt low-margin firms and called for more direct central bank intervention, saying current policies, such as encouraging exporters to delay currency exchanges until after 10 a.m., are having limited effect.