New Taiwan Dollar appreciates past the 31.4 mark! Foreign capital inflows and exporters selling foreign exchange drive the dual momentum

$31.405 – This number has refreshed market expectations. Today, the New Taiwan Dollar against the US Dollar briefly touched this level in the early trading session, appreciating by 4.2 cents. The market instantly heated up, with cheers of “hot money is coming back.” But is this wave of appreciation a fleeting moment or the prelude to further upward movement? The answer lies in two key driving forces.

Fed’s Dovish Shift Sparks Dollar Decline

The most direct trigger comes from the Federal Reserve. As Fed officials signal a dovish stance, market expectations for a rate cut in December have significantly increased, causing the US Dollar Index to fall back. It is currently supported around 100.16. The once-strong dollar is now loosening at high levels.

This shift sends a clear signal to the entire Asian currency market — currencies like the Yen, Korean Won, and New Taiwan Dollar finally have some breathing room. However, it is worth noting that the US Dollar Index still remains above the 100 mark, indicating that the dollar’s strength has not fully reversed, and the appreciation of Asian currencies remains limited by a ceiling.

Taiwan Stock Market Surge + Exporters’ FX Selling Double Boost New Taiwan Dollar Appreciation

In addition to the currency market changes, the stock market’s performance has also acted as a catalyst. Today, Taiwan stocks led by electronics heavyweight stocks performed spectacularly, attracting foreign capital inflows. As the month-end approaches, exporters’ actual FX selling demand has also emerged, creating a favorable scenario of both stock and currency appreciation. The New Taiwan Dollar opened at 31.42 in the morning and immediately rallied to 31.405, demonstrating clear upward momentum.

Can the New Taiwan Dollar’s Appreciation Continue? Key Points to Watch

However, analysts caution that although the New Taiwan Dollar is performing strongly in the short term, the US Dollar Index remains above the 100 threshold, indicating that the overall dollar strength is still dominant. This puts a cap on further appreciation of Asian currencies. Currently, the New Taiwan Dollar fluctuates around 31.415. Whether it can break through this critical level depends on continued foreign investment and the US dollar trend.

Practical Tips for Traders

The international currency market is full of variables, and relying on just one or two signals is not enough. Traders are advised that, besides closely monitoring US economic data, they should also be alert to how China’s economic situation influences the Asian currency market.

Specifically, exporters can consider gradually selling FX when the New Taiwan Dollar appreciates near 31.4 to lock in profits. Importers might wait patiently for a pullback opportunity before adjusting their positions. Whether the two main drivers behind this wave of New Taiwan Dollar appreciation — Fed policy shift and Taiwan stock capital inflows — can continue to ferment will be crucial in determining the market’s future direction.