The exchange rate forecasts for the Canadian dollar (CAD) against the Taiwanese dollar (TWD) reflect a complex interplay of recent developments and market dynamics. Currently, the CAD is trading at 21.31, which is 4.0% below its three-month average of 22.19. This depreciation comes amidst heightened volatility, with the CAD fluctuating between 21.11 and 23.59 over the past few months.
Analysts suggest that the CAD has experienced some support due to its positive correlation with the stronger US dollar; however, weakening oil prices remain a limiting factor. As a commodity-linked currency, the CAD's performance is closely tied to oil market movements. Recent data indicates that oil prices are currently trading at $68.80, a 3.2% increase over the three-month average, with a volatility range of 60.14 to 78.85. This rise in oil prices could bolster the CAD in the near term, particularly if sustained.
In addition to commodity prices, recent political changes and trade tensions have also influenced the CAD's outlook. The departure of Prime Minister Justin Trudeau amid political volatility has raised concerns about economic stability. Moreover, the introduction of tariffs by the US on Canadian goods could dampen economic prospects, leading to a cautious outlook for the loonie. Economists predict that these geopolitical and economic factors, combined with the Bank of Canada's recent decision to pause interest rate cuts, will result in limited upside potential for the CAD.
Conversely, developments regarding the TWD, influenced by external pressures such as tariffs from the US and potential geopolitical threats from China, are also significant. The Taiwanese dollar faces challenges, particularly from the global tech slowdown, which could impact Taiwan's robust technology sector. Analysts indicate that these factors could result in continued volatility for the TWD, adding complexity to the CAD/TWD exchange rate dynamics.
In summary, while the CAD may find some support from rising oil prices and trade relationships, ongoing political instability and external trade tensions are likely to introduce challenges. As such, businesses and individuals engaging in international transactions involving CAD and TWD should stay vigilant and consider these market factors in their operations.