The Taiwan dollar jumped over 2% in volatile trading as exporters sold dollars, testing the central bank’s limits on currency strength.
Recent swings come as authorities try to curb rapid appreciation, protecting exports and insurers. The currency’s drop on Monday likely helped local firms, which have struggled with its earlier rally, ahead of mid-year financial reports.
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Analysts expect volatility to continue until there’s clarity on US-China trade. The central bank has signaled it will keep the forex market stable, but faces pressure from foreign inflows and corporate dollar sales.
A stronger Taiwan dollar could hurt insurers holding unhedged dollar assets. While intervention may slow the trend, a weakening US dollar could keep upward pressure on the local currency.
Last month, regulators warned against speculative trading and blocked foreign bets on the Taiwan dollar via ETFs.
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