Will the New Taiwan Dollar continue to depreciate? The truth and concerns after breaking above 31.4 yuan

Foreign capital flows back, Taiwanese stocks surge, New Taiwan Dollar appreciates… While seemingly good news is everywhere, a deeper analysis reveals hidden opportunities behind this rebound. The New Taiwan Dollar against the US dollar once surged to 31.405, hitting a recent high, and the market cheers for the “return of hot money,” but is this a reversal signal or just a fleeting moment?

Fed Policy Shift Sparks Appreciation Sparks

The dollar’s strong pattern is showing signs of loosening. Federal Reserve officials recently signaled a dovish stance, with expectations of a rate cut in December rising, causing the US dollar index to retreat from high levels to around 100.16. This shift breaks the long-term high-range consolidation of the dollar, giving previously suppressed Asian currencies a breathing space. Major Asian currencies like the yen and won are also rebounding, and the appreciation of the New Taiwan Dollar is not an isolated phenomenon but a result of regional currency revaluation.

Taiwan Stock Rally as a Catalyst, Exporters’ FX Selling Adds Fuel

Today, Taiwan stocks rose strongly led by electronics heavyweight stocks, attracting expectations of foreign capital inflow. Moreover, at the end of the month, real FX selling by exporters was triggered. The dual rise of stocks and currencies created a scenario—The New Taiwan Dollar opened at 31.42 and quickly appreciated to 31.405, demonstrating significant upward momentum. The combined effect of these forces temporarily suppressed the depreciation pressure on the New Taiwan Dollar.

Limited Room for Further Appreciation, Key Still in Dollar Strength

However, optimism should not be overdone. Although the US dollar index has retreated, it still firmly stays above 100, maintaining a generally strong dollar pattern. This reality limits the room for Asian currencies to appreciate—The New Taiwan Dollar is currently fluctuating around 31.415, making it difficult to break through higher levels. Analysts warn that as long as the dollar remains fundamentally strong, the New Taiwan Dollar’s appreciation will be hard to sustain.

Three Major Risks Cannot Be Ignored

Market participants need to be aware of several potential variables: First, US economic data remains to be seen, and expectations of rate cuts could be revised at any time; second, China’s economic performance increasingly constrains Asian FX markets; third, international geopolitical uncertainties. Any change in these factors could reverse the current appreciation trend.

Outlook: Will the Taiwan Dollar Continue to Depreciate?

In the short term, the New Taiwan Dollar may challenge the 31.3 level, but a complete reversal of depreciation expectations requires the Fed to truly start a rate-cut cycle and for foreign capital to continue flowing in. Currently, these two conditions are not yet certain. Traders are advised that exporters can consider FX selling near 31.4 to lock in gains; importers should patiently wait for a pullback before positioning. Investors should closely monitor US economic data and China’s economic trends, avoid being misled by short-term rebounds, and focus on the true drivers of the medium-term trend of the New Taiwan Dollar.