Taiwan Dollar Surges Over 5%, US Dollar Declines

The Taiwan dollar surged to its highest level against the U.S. dollar in years, with a single-day gain not seen since the 1980s, fueling speculation about potential currency revaluations in Asia as a means to gain leverage in ongoing U.S. trade talks. This appreciation was driven by Taiwan's strong export performance, particularly in technology sectors, increased foreign investment, and optimism over possible U.S.-Taiwan trade agreements. Market participants suspect that Taiwan may be allowing its currency to strengthen to support trade negotiations, despite official denials from Taiwanese authorities. The surge in the Taiwan dollar also triggered a spillover effect, causing other Asia-Pacific currencies to rise against the U.S. dollar. The moves occurred amid illiquid market conditions due to public holidays in several countries, further exaggerating the Taiwan dollar’s gains. Analysts note that any easing of trade tensions could continue to bolster Asian currencies and risk-sensitive assets.