The New Taiwan dollar yesterday extended its losing streak to a fifth straight session, closing at NT$29.719 against the US dollar, down NT$0.13 from the previous day, as broad US dollar strength and lingering trade uncertainties weighed on non-US dollar currencies, traders said.
The NT dollar depreciated NT$0.357, or 1.21 percent, against the greenback over the past five trading days, central bank data showed.
Turnover at Taipei Forex Inc fell to US$878 million, reflecting subdued investor activity as markets await Washington’s tariff rate on Taiwan.
Photo: CNA
“The US dollar index has shown significant strength in recent sessions, putting pressure on non-dollar currencies,” a Taipei-based currency trader said. “With Taiwan’s tariff arrangement [with the US] still unresolved, many investors prefer to stay on the sidelines.”
Washington has concluded trade agreements with economies including the EU, Japan, Vietnam and Indonesia, featuring lower-than-expected tariff rates — moves that have helped stabilize global trade sentiment and supported the greenback, the trader added.
The shift marks a twist in Washington’s trade posture. Initially viewed as confrontational, recent actions suggest a more measured and pragmatic strategy, the trader said.
The extension of the US-China trade truce beyond its Aug. 12 deadline — following inconclusive talks in Stockholm on Tuesday — further signals Washington’s intent to avoid immediate escalation and buy time for further negotiations, they said.
However, the outcome of Taiwan’s own discussions with the US remains unclear, keeping investors cautious.
“If the US sets the tariff rate above 20 percent for Taiwan, the NT dollar could face further downside risks,” another trader said. “A lower-than-expected rate, on the other hand, could ease pressure and allow for a modest rebound.”
In the meantime, the central bank has allowed the NT dollar to move in line with broader market forces under its “willow theory” approach to exchange rate management, a third trader said.
First articulated by then-central bank governor Perng Fai-nan (彭淮南) in 2005 and upheld by central bank Governor Yang Chin-long (楊金龍), the strategy favors flexibility and selective intervention — guiding the currency like a willow bending with the wind — rather than defending a fixed level.
A weaker NT dollar should offer local exporters some relief, easing concerns over eroding competitiveness and mitigating foreign exchange losses, the third trader said.
Meanwhile, attention is turning to global monetary policy.
The US Federal Reserve and the Bank of Japan are scheduled to hold policy meetings this week, with markets broadly expecting both to leave interest rates unchanged as they gauge the effects of new US tariffs.
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