New Taiwan Dollar rebound: The reason for the US dollar appreciation has reversed, and hot money is shifting to Asia

The Logic of US Dollar Appreciation Suddenly Fails: Federal Reserve’s Attitude Becomes a Turning Point

The key to this round of market movement lies in the transformation of the US dollar’s identity. The original reasons for the dollar’s appreciation were mainly twofold: first, the Federal Reserve maintaining high interest rates; second, global capital fleeing into dollar assets. However, recent market sentiment has shifted unexpectedly, with Fed officials continuously signaling dovish policies, and expectations of rate cuts in December rising. This directly undermines the dollar’s support logic. The US Dollar Index has fallen from its high to around 100.16, suggesting that the appreciation cycle may be coming to an end.

Taiwan Stock Surge Acts as a Catalyst for New Taiwan Dollar Appreciation

Interestingly, the strong rebound of the New Taiwan Dollar is highly correlated with the performance of the Taiwan stock market. Today, Taiwan stocks surged significantly driven by major electronics weightings, simultaneously attracting large foreign capital inflows. As the reasons for the dollar’s appreciation fade and the US Dollar Index weakens, it coincides with end-of-month exporter’s currency selling demand, creating a rare resonance of stock and currency appreciation. The NT$ temporarily surged to 31.405, appreciating by 4.2 cents, with the opening price at 31.42 showing strong momentum.

Asian Currencies Rise Overall, but the Ceiling Is Clear; US Dollar Still Holds the Power

The entire Asian currency region has felt this rally, with major currencies like the yen and won rising together. However, it is worth noting that although the reasons for the dollar’s appreciation have diminished, the US Dollar Index remains above 100, indicating that the global dollar landscape remains relatively strong. Therefore, the appreciation potential of Asian currencies is significantly constrained. The NT$ currently fluctuates around 31.415, and whether it can further challenge the 31.3 level remains to be seen.

Foreign Capital Flows and Economic Data Determine the Next Phase

Analysts believe that the sustainability of this rebound depends on two main factors. First, whether foreign investors continue to net inflow into Taiwan. Second, whether US economic data can further confirm the Fed’s rate cut cycle. Additionally, China’s economic developments also have a spillover effect on Asian currency markets that cannot be ignored.

In terms of trading advice, exporters can consider selling NT$ on rallies near 31.4 to lock in profits, while importers should patiently wait for the exchange rate to retreat to lower levels before making moves. In the short term, whether the NT$ can stabilize above 31.4 will be an important indicator of market confidence.