Taiwan dollar surges past 30: The strongest USD/TWD exchange rate in 30 years, why is the central bank hesitant to intervene?

The recent performance of the New Taiwan Dollar (NTD) has been truly astonishing—rising nearly 10% in just two trading days, marking the largest single-day gain in 40 years. What is behind this crazy appreciation trend? Is it a fleeting phenomenon or a long-term trend? For investors looking to follow the trend and make a quick profit, how should they grasp the historical patterns of USD/NTD exchange rates?

Understanding the True Face of the NTD Exchange Rate Through Historical Data

When it comes to the 30-year trend of USD/NTD, data is more convincing than any analysis.

Over the past decade (October 2014 to October 2024), the NTD against the US dollar has fluctuated between 27 and 34, with a volatility of about 23%. In comparison, the USD/JPY has a volatility of 50% (ranging from 99 to 161), making it a “roller coaster” among major global currencies. This indicates that the NTD is relatively a “stabilized force.”

However, this stability has recently been broken.

From the Federal Reserve’s perspective, the story over the past ten years is clear:

• After the 2008 financial crisis, the Fed launched three rounds of quantitative easing (QE). When QE slowed in 2013, the dollar started to strengthen, and the NTD exchange rate climbed from its lows to 33.
• In 2020, during the pandemic, the Fed’s balance sheet surged from $4.5 trillion to $9 trillion, with interest rates dropping to zero. As a result, the NTD soared to 27 to buy 1 USD.
• In 2022, with runaway inflation, the Fed initiated aggressive rate hikes, re-strengthening the dollar, and the NTD returned to around 32.
• Since September 2024, as the Fed began cutting interest rates, the recent appreciation of the NTD has occurred.

In simple terms, the true trajectory of the NTD’s rise and fall is not in Taiwan’s central bank hands but firmly in the hands of the Federal Reserve.

Why has the NTD recently appreciated so aggressively? Three key factors stacking up

( Trump’s tariff policies ignited the fuse

On April 2, this year, U.S. President Trump announced a 90-day delay in implementing reciprocal tariffs. The market immediately responded:

• Global procurement rushed before tariffs took effect, benefiting Taiwan as a key node in the global supply chain.
• This expectation led to a surge of foreign capital inflows, providing strong buying support for the NTD.

As a result, on May 2, the NTD surged 5% in a single day, setting a 40-year record, closing at 31.064. On May 5, it even broke the psychological barrier of 30, reaching a high of 29.59.

) The central bank faces a helpless dilemma

Interestingly, the central bank faces a delicate predicament.

Trump’s administration’s “Fair Reciprocity Plan” explicitly emphasizes “currency intervention” as a key review point. What does this mean? If the central bank intervenes too forcefully in the forex market, it could be accused by the U.S. Treasury of being a currency manipulator.

Moreover, Taiwan’s data for the first quarter is concerning:

• Trade surplus of $23.57 billion, up 23% year-on-year
• Surplus with the U.S. surged 134%, reaching $22.09 billion

Against this backdrop, if the central bank continues to intervene strongly as in the past, it could easily invite trouble. This also explains why officials can only cautiously mention “market expectations” and dare not directly respond to rumors about exchange rate intervention.

Defensive hedging operations by financial institutions

UBS’s analysis points out that a 5% single-day increase far exceeds what economic fundamentals can explain. What is the real driver? Large-scale hedging operations by Taiwan’s insurance companies and exporters.

Taiwan’s life insurance industry holds about $1.7 trillion in overseas assets (mainly U.S. Treasuries), yet has long lacked currency hedging. In the past, they dared to do so because “the central bank can always suppress the NTD’s appreciation.” Now? Once the central bank intervenes, it faces the risk of being accused of currency manipulation.

This structural contradiction, once triggered, could be terrifying—UBS estimates that restoring to the historical average hedging level alone could trigger about $100 billion in USD selling pressure, equivalent to 14% of Taiwan’s GDP.

Will the NTD continue to appreciate? Four dimensions to observe the trend

28 Yuan is almost impossible

Although Trump’s government has motives to pressure the NTD to appreciate, the industry consensus is: The possibility of the NTD reaching 28 per USD is extremely low. There is an invisible red line in the market—the central bank’s tolerance limit.

Valuation based on BIS real effective exchange rate (REER) index###

The BIS’s REER is an important tool to assess whether an exchange rate is reasonable. With 100 as the equilibrium:

• USD index around 113 → significantly overvalued
• New Taiwan Dollar index around 96 → reasonably undervalued
• JPY and KRW indices at 73 and 89 → Asian currencies are generally undervalued

In other words, the NTD still has room to appreciate but not infinitely.

On an annual scale, the appreciation is actually similar to regional currencies(

If we ignore the recent crazy wave and look at the cumulative appreciation since the beginning of the year:

• NTD up 8.74%
• JPY up 8.47%
• KRW up 7.17%

Everyone is rising. The abnormality of the NTD is just concentrated in recent times; long-term trends are actually in sync with the overall Asian market.

) UBS’s forecast: further appreciation but limited

UBS’s latest report provides a more detailed judgment:

• Valuation models show the NTD has shifted from moderate undervaluation to about 2.7 standard deviations above fair value.
• FX derivatives market shows the “strongest appreciation expectation in five years.”
• Historical experience suggests that after such large single-day jumps, a quick correction is unlikely.

Conclusion: The NTD will continue to appreciate, but when the trade-weighted index rises another 3% (approaching the central bank’s tolerance limit), official intervention will significantly increase.

How to seize this trend?

( Veteran approach: short-term trading + derivatives hedging

If you are an experienced forex trader with a bold appetite, there are two paths:

Path 1: Directly trade USD/TWD on forex platforms for short-term gains, capturing daily or even intra-day volatility. The speed of NTD appreciation is so fast that short-term profits are indeed substantial.

Path 2: Already holding USD assets? Use forward contracts or other derivatives to lock in appreciation gains. Instead of passively enduring exchange rate fluctuations, actively take action.

) Beginner approach: small-scale testing + strict discipline

For new investors wanting to follow this short-term opportunity, remember these iron rules:

1. Start with small amounts—don’t go all-in immediately. Use demo accounts provided by forex platforms to practice and test your strategies.
2. Never impulsively add positions—loss of control can lead to margin calls. Low leverage trading USD/TWD is the way to go.
3. Set stop-loss points—this is not optional; it’s your last line of defense to protect yourself.

Many forex platforms offer demo accounts. Use virtual funds to experience the market’s real volatility. Once you understand the NTD’s temperament, then use real money.

Long-term investment approach: control position size + diversify risk

If you are optimistic about the NTD’s long-term prospects (stable economy, booming semiconductor exports, relatively strong NTD), you can allocate as follows:

• Control forex positions to 5%-10% of total assets—don’t put all chips on exchange rate fluctuations.
• Combine with Taiwan stocks or bonds—use other assets to hedge currency risk.
• Keep an eye on central bank and US-Taiwan trade dynamics—these are decisive factors for the exchange rate.

What does the “30 Yuan” everyone talks about really mean?

In Taiwan’s financial market, the figure of 1 USD to 30 NTD has a special psychological significance.

Past ten years of trading experience have formed a consensus:

• Below 30, most believe USD can be bought
• Above 32, most believe USD should be sold

This is not a scientific formula but a “collective cognition” accumulated over years by market participants. When the NTD recently broke through 30, many people’s reactions were—the line is broken, will it continue to rise?

From technical and fundamental perspectives, 30 is indeed not the end. But considering the central bank’s willingness to intervene and market tolerance, the appreciation speed will gradually slow, and around 29 might be the short-term high point.

Final reminder

This wave of NTD appreciation offers a rare opportunity, but risks should not be underestimated. Especially for beginners new to forex trading:

• Don’t be blinded by short-term gains; risk control always comes first.
• Keep a close eye on Fed monetary policy and US-Taiwan trade negotiations.
• Forex should be part of your asset allocation, not all-in.
• Practice with demo accounts, understand the market thoroughly before using real money.

Remember: The forex market is never permanently one-sided, and this appreciation of the NTD is no exception.