NTD to USD trend chart is hot and updated! Will it rise further after breaking the 30 mark? Investment strategies for 2025 at a glance

How High Will the NT Dollar Appreciate Against the US Dollar? Key Indicators to Watch

The NT dollar has recently performed remarkably well, but is there still room for further appreciation? Analyzing from multiple angles will lead to a more accurate assessment.

The Bank for International Settlements(BIS)'s real effective exchange rate index(REER) is an important reference for evaluating whether the exchange rate is reasonable. With 100 as the equilibrium value, above 100 indicates overvaluation, below 100 suggests undervaluation. As of the end of March:

• US Dollar Index about 113 → Clearly in a highly overvalued state
• New Taiwan Dollar Index around 96 → Reasonably undervalued
• Yen Index only 73, Korean Won 89 → Major Asian export currencies are more obviously undervalued

This indicates that from a valuation perspective, the NT dollar still has some upward space.

UBS’s latest research points out that the appreciation trend of the USD against the NT dollar may continue. Their valuation model shows the NT dollar has shifted from moderate undervaluation to a fair value that is 2.7 standard deviations higher; FX derivatives markets also show the “strongest appreciation expectation in 5 years”; historical patterns suggest that large single-day gains are usually not immediately reversed. UBS advises investors not to rush into contrarian trades, but expects that when the trade-weighted index of the NT dollar rises another 3% (approaching the central bank’s tolerance limit), official interventions may intensify to stabilize volatility.

Why Did the NT Dollar Suddenly Surge? Analyzing the Three Main Drivers

US-Taiwan tariff negotiations spark surge

After the Trump administration announced a 90-day delay in implementing reciprocal tariffs, two major expectations emerged. First, global procurement will concentrate, and Taiwan, as a major export country, is expected to benefit in the short term, providing strong support for the NT dollar; second, the IMF unexpectedly raised Taiwan’s economic growth forecast, coupled with excellent performance of the Taiwan stock market. These positive news attracted a large influx of foreign capital, becoming the first wave of driving force behind the NT dollar’s surge.

The Trump administration’s “Fair Reciprocity Plan” explicitly highlights “currency intervention” as a key review point, making the market more concerned about the central bank’s policy space. Taiwan’s trade surplus in Q1 reached $23.57 billion (up 23% YoY), with the US trade surplus soaring 134% to $22.09 billion. If the central bank finds it difficult to intervene strongly as in the past, the NT dollar will indeed face significant appreciation pressure.

The Central Bank Faces Policy Dilemmas

On May 2, the NT dollar appreciated 5% against the USD in a single day, the largest single-day gain in 40 years, briefly breaking the important psychological threshold of 30 NT dollars, reaching a high of 29.59. After the weekend, on May 5, the NT dollar continued to rise by 4.92%. In just two trading days, the NT dollar surged nearly 10%, setting multiple historical records and triggering the third-largest trading volume in forex history.

The central bank’s emergency statement that day did not directly address the most pressing market concern—whether US-Taiwan tariff negotiations involve exchange rate clauses. The bank attributed the volatility to “market expectations that the US may require trading partners’ currencies to appreciate,” but in the context of US-Taiwan negotiations, the central bank may find it difficult to intervene as forcefully as before.

Financial institutions’ hedging operations amplify volatility

UBS’s analysis reveals deeper reasons. A 5% single-day increase exceeds what traditional economic indicators can explain. Besides market sentiment, large-scale FX hedging operations by Taiwanese insurers and corporations, as well as concentrated unwinding of NT dollar financing arbitrage trades, jointly caused this abnormal movement.

Particularly noteworthy is that simply restoring FX hedging/deposits to trend levels could trigger about $100 billion USD in dollar selling pressure (equivalent to 14% of Taiwan’s GDP), a potential risk not to be underestimated.

On May 3, the Financial Times reported that the main driver of this currency surge was actually Taiwanese life insurers’ “panic” hedging of huge USD assets. Taiwanese life insurers hold up to $1.7 trillion in overseas assets (mainly US Treasuries), yet have long lacked sufficient FX hedging measures. In the past, “Taiwan’s central bank could effectively suppress sharp NT dollar appreciation,” but now “the central bank is caught in a dilemma… worried that intervention might lead the US Treasury to label Taiwan as a currency manipulator.”

However, the central bank governor Yang Jinlong explicitly rebutted this in a subsequent press conference, emphasizing that “compared to large exporters, life insurers are less likely to increase operations.”

What Is the Long-Term Outlook for the NT Dollar Against the US Dollar?

Historical Review: Volatility Patterns Over the Past Decade

Extending the observation period to a full ten years (October 2014 to October 2024), the NT dollar’s exchange rate against the USD has fluctuated between 27 and 34, a volatility of 23%. Compared to global currencies, Taiwan’s currency volatility is relatively moderate. The Yen’s range is as high as 50% (from 99 to 161 USD/JPY), twice that of the NT dollar.

The USD/NT dollar trend is mainly driven by the Federal Reserve’s policies. From 2015 to mid-2018, amid China’s stock market crash and the European debt crisis, the US slowed its balance sheet reduction (QT) and continued quantitative easing, strengthening the NT dollar. After 2018, the US raised interest rates, but in 2020, with the pandemic hitting suddenly, the Fed doubled its balance sheet in a short period—from $4.5 trillion to $9 trillion—and lowered rates to zero. As a result, the USD depreciated, and the NT dollar surged to 27.

Post-2022, US inflation spiraled out of control, prompting the Fed to rapidly hike interest rates, causing the dollar to rebound. Since the Fed announced the tapering of its third round of quantitative easing in 2013, US rates have risen, capital has flowed back to the US, and the USD/NT dollar has climbed from lows to 33. Until the Fed ended its high-interest cycle and started cutting rates in September 2024, the exchange rate remained around 32.

Future Expectations: 28 Yuan Is Difficult to Break

Most industry insiders believe that it is highly unlikely for the NT dollar to appreciate to 28 per USD. Comparing the recent abnormal fluctuations over nearly a month with the period from the beginning of the year, the cumulative appreciation of the NT dollar against the USD is roughly in line with other Asian currencies:

• NT dollar up 8.74%
• Yen up 8.47%
• Korean Won up 7.17%

Although the NT dollar has recently appreciated rapidly, from a longer-term perspective, its trend remains synchronized with regional currencies and shows no particular outperformance.

How to Use the NT Dollar/US Dollar Trend for Investment?

Beginners

If you are new to forex trading and want to seize recent volatility opportunities, remember a few principles: start with small amounts, avoid impulsively increasing your position, or you might risk losing everything if your mindset falters. Platforms like Mitrade are suitable for beginners to practice small-scale short-term trading.

Many forex platforms offer demo accounts—it’s recommended to test your strategies there first. Use low leverage for USD/TWD, and always set stop-loss points to protect yourself. Keep an eye on the central bank’s moves and the latest US-Taiwan trade developments, as these will directly influence the exchange rate.

Advanced traders

If you are an experienced forex trader with high risk tolerance, you can choose two strategies: first, conduct short-term USD/TWD trades on forex platforms, capturing daily or intra-day fluctuations; second, if you already hold USD assets, use derivatives like forward contracts to hedge, locking in the NT dollar appreciation gains.

Long-term Investment Planning

Taiwan’s economy is solid, with booming semiconductor exports, so the NT dollar may fluctuate between 30 and 30.5. In the long run, the NT dollar remains relatively strong, but FX positions should be controlled within 5%-10% of total assets. Remaining funds should be diversified into other global assets to effectively manage overall risk.

To earn steady FX gains, use low leverage for USD/TWD and set stop-loss points. Don’t put all eggs in one basket—combine with investments in Taiwan stocks or bonds. Even if exchange rates fluctuate significantly, this diversification helps control overall investment risk.

Market Consensus Reference Point

Over the past decade, the market has formed a “common yardstick”—30 NT dollars. Most investors believe that USD below 30 is worth buying, above 32 should be considered for selling. This can serve as a reference for long-term FX investment.

Currently, the USD/NT dollar trend is still influenced by Fed policies, US-Taiwan trade negotiations, and other factors, with short-term volatility likely to continue. But from valuation and fundamentals, the NT dollar still has some medium-term support. Investors should closely monitor market developments and seize opportunities cautiously.