Dollar Falls Amid Rumors of a Possible Appreciation of the Taiwanese Currency

The Taiwan dollar soared to its strongest level in nearly three years on Monday, continuing a multi-day rally, as the U.S. dollar slid across the board. By 08:10 ET (12:10 GMT), the greenback had fallen 5.1% against the Taiwan dollar, trading at 29.162. At the same time, the U.S. dollar index, which measures the greenback against a basket of major currencies, dropped 0.4% to 99.60.

While the precise catalyst behind the Taiwan dollar’s sharp appreciation remains unclear, Reuters reported that traders noted a lack of buyers for the U.S. dollars being sold by local insurers and exporters. This imbalance has likely contributed to the Taiwan dollar’s rapid gains.

Taiwanese and U.S. officials have also entered into trade negotiations aimed at averting steep “reciprocal” tariffs proposed by Washington. Speculation has mounted that the U.S. may be pressuring certain Asian economies—Taiwan included—to allow their currencies to strengthen as part of efforts to address trade imbalances.

Taiwan’s central bank, known for stepping in during sharp currency swings, has so far remained on the sidelines, refraining from intervention despite the Taiwan dollar’s notable rally. A senior executive in Taiwan’s financial sector told Reuters that the central bank may be easing capital inflow restrictions due to U.S. pressure.

In early April, President Donald Trump unveiled a series of aggressive tariffs targeting several countries, including a proposed 32% levy on Taiwanese goods. While the implementation of these measures was delayed by 90 days, Taiwan’s government confirmed over the weekend that it had held preliminary discussions with U.S. officials in an attempt to defuse trade tensions.

Positive Trade Sentiment Lifts Taiwan

Investor sentiment toward Taiwan was also bolstered by optimism surrounding potential U.S.-China trade talks. Taiwan’s economy is highly exposed to both the U.S. and China through exports and integrated supply chains. In a television interview on Sunday, President Trump said he believed China was eager to reach a trade agreement, though he provided no clear timeline.

Key U.S. Data and Fed Decision in Focus

Looking ahead, markets are awaiting the latest U.S. services sector data from the Institute for Supply Management (ISM), due later on Monday. A weaker-than-expected reading could signal further economic headwinds for the U.S., particularly as recent strong labor market figures offered only limited support for the dollar.

The Federal Reserve is also scheduled to announce its monetary policy decision later this week. Markets widely expect the Fed to keep interest rates unchanged, despite continued public pressure from President Trump to lower borrowing costs. While Trump has said he does not plan to remove Fed Chair Jerome Powell, he criticized Powell in a recent interview, describing him as a “stiff” for not cutting rates more aggressively.