New Taiwan dollar shows a clear upward trend; the US dollar exchange rate reversal drives a rebound to the 31.4 level

Foreign capital re-enters the Taiwanese market, and the New Taiwan Dollar exchange rate shows a significant upward trend. Today, the NT$ against the US dollar briefly touched 31.405, with a daily increase of 4.2 cents. Market participants are exclaiming, “The capital flow has changed!” Behind this rebound are dual drivers: the shift in US dollar exchange rate policy and the rally in Taiwan stocks.

Easing Rate Hike Expectations Bring Turnaround in US Dollar Exchange Rate

Federal Reserve officials recently signaled a dovish stance, reversing the previous strong rate hike cycle. Expectations for a rate cut in December have risen sharply, causing the US dollar to weaken from its high point, with the dollar index falling back to around 100.16 from its peak. This shift breaks the recent dominance of the US dollar, giving Asian currencies relief pressure, with the yen, won, and other major Asian currencies rebounding accordingly.

Taiwan Stock Market Leads Gains, Exporters’ Currency Selling Boost NT$ with Dual Factors

Today, Taiwan stocks surged significantly, led by electronics blue chips, coupled with actual currency selling by exporters at the end of the month, creating a scenario of simultaneous stock and currency appreciation. The NT$ opened at 31.42 and quickly appreciated to 31.405, demonstrating strong upward momentum, reflecting renewed confidence from foreign investors in the Taiwanese market.

Analyst Viewpoint: Dual Logic Behind US Dollar Exchange Rate

Currency analysts point out that this NT$ appreciation is mainly driven by two factors. First, the US dollar weakened due to expectations of rate cuts, breaking the long-term strength pattern of the dollar during the rate hike cycle. Second, the rally in Taiwan stocks attracted additional foreign investment, with a clear flow-on effect. If these two drivers persist, the NT$ may challenge the 31.3 level, further improving its relative position against the US dollar.

Risk Warning: US Dollar Index Still Holds Key Level of 100

Although the NT$ rebound is robust, analysts warn that the dollar index remains above the critical 100 level, and the overall US dollar exchange rate remains relatively strong. The appreciation potential of Asian currencies is thus limited, with the NT$ currently fluctuating around 31.415. Market participants should continue to monitor foreign capital flows, dollar strength, and China’s economic data for potential impacts on the forex market.

Trading Recommendations

For exporters and importers, the current turning point in the US dollar exchange rate offers an opportunity to adjust positions. Exporters are advised to consider selling NT$ near 31.4 to lock in exchange rate risk; importers can wait for a pullback in the NT$ to make purchases. Regardless of whether the cycle involves rate hikes or cuts, understanding the volatility rhythm of the US dollar is crucial.

The recent rebound of the NT$ injects vitality into the market. Whether it can hold above the 31.4 level will become an important indicator to observe in relation to the US dollar index and foreign capital movements.