Analysts indicate that the recent strength of the US dollar (USD) is largely influenced by hawkish decisions from the Federal Reserve (Fed). The Fed’s decision to maintain interest rates has created an environment conducive to USD appreciation, especially as inflationary pressures from US tariffs are anticipated to remain elevated. However, geopolitical tensions, particularly fears of US involvement in conflicts like the Israel-Iran war, have caused the USD to trim some of its recent gains.
The USD's strength is significantly driven by its status as a safe-haven currency. In times of economic uncertainty or conflict, investors tend to flock to USD assets, driving up its value. High-interest rates continue to attract investment, while concerns surrounding global economic stability could lead to fluctuations in the currency. Furthermore, as the world's primary reserve currency, the dollar's performance is closely tied to U.S. monetary policies, economic data, and market sentiment.
Turning to the Taiwan Dollar (TWD), the currency faces headwinds due to recent US trade policies, particularly a 32% tariff on Taiwanese goods. This is likely to put pressure on the TWD, especially amid potential threats from China and the global tech slowdown that could impact Taiwan's robust technology sector. Heightened geopolitical tensions present additional challenges to the TWD's stability.
Current USD to TWD rates show the USD trading at approximately 29.59, which is 5.3% below its three-month average of 31.24. The USD to TWD pair has experienced notable volatility, with a range of fluctuation between 29.18 and 33.27. Experts suggest that ongoing developments in U.S. economic policy and regional geopolitical dynamics will continue to shape the exchange rate, advising stakeholders to monitor these events closely to optimize their international transaction strategies.