## New Taiwan Dollar Shock Triggers Chain Reactions: How Should Investors Respond to Exchange Rate Forecast Risks?

Following the release of the US-Taiwan exchange rate joint statement, the New Taiwan dollar experienced significant fluctuations today. After opening at 31.13 with a 2-cent appreciation in the early trading session, the gains quickly narrowed, indicating market disagreement over the future trend. CTBC Financial Holding's General Manager spokesperson Gao Lixue pointed out that, referencing Japan and Korea's experiences, similar statements do not necessarily lead to sharp exchange rate volatility. However, analysts are warning that if the New Taiwan dollar repeats the rapid appreciation seen in early May, it could have ripple effects on traditional manufacturing, life insurance, and technology stocks.

**Taiwan Stock Market Volatility Intensifies, Three Major Concerns Emerge**

The Taiwan stock market opened higher today, with the Weighted Index rising over 200 points in the early session, and TSMC, the leading wafer foundry, also climbing. But the market faces three hurdles: recent foreign selling has exceeded NT$300 billion, making it difficult for the index to break through 28,000 points; capital is shifting from AI concept stocks to memory groups, creating rotation pressure; and the appreciation of the New Taiwan dollar will intensify dual challenges for traditional industries and exchange rate stability.

**Exchange Rate Forecasts Face Uncertainty; Central Bank's Moderate Intervention Is Key**

The offshore non-deliverable forward (NDF) for the New Taiwan dollar jumped by 4角 after the statement, reflecting a shift in market expectations for the exchange rate. Analysts note that excessive daily fluctuations could pressure the foreign exchange market, and the central bank is expected to intervene accordingly. Historically, the New Taiwan dollar has risen to a high of 28, and current levels at 31 suggest room for appreciation. However, the central bank will likely use appropriate measures to curb excessive volatility, with short-term fluctuations expected to oscillate around the NT$30 range.

**Industry Pressure: Life Insurance Sector Faces Book Loss Risks**

CTBC Financial Holding recently announced its results for the first three quarters of 2025, with a pre-tax profit of NT$69.96 billion and a net profit of NT$60.76 billion, translating to an EPS of NT$3.06, maintaining a high ROE of 17.46%. But if the New Taiwan dollar appreciates sharply as in May, life insurers holding large amounts of foreign currency assets could see significant unrealized losses. Traditional industries are also under dual pressure from tariffs and exchange rates, while tech stocks face concerns over overvaluation in AI.

**This Week's Market Focus: Investors Should Closely Monitor Exchange Rate Movements**

This week, market attention is centered on NVIDIA's earnings report and the settlement of the Taiwan Futures Index. In the short term, the Taiwan stock market is expected to remain volatile at high levels. Investors should closely observe how exchange rate fluctuations could impact various industries and adjust their portfolios accordingly, especially with cautious evaluation of allocations in life insurance, traditional industries, and technology stocks.