The USD to TWD exchange rate has seen recent downward pressure as the US dollar weakens amid expectations of aggressive Federal Reserve rate cuts starting in 2026. Recent reports indicated a surprising decline in US inflation to 2.7%, contributing to this bearish sentiment surrounding the USD. Analysts note that with multiple cuts in rates priced in for the spring, the dollar's appeal as a safe haven is diminishing, especially as risk assets like equities have begun to stabilize.
The US Dollar Index (DXY) has retraced from its recent highs with traders adjusting expectations due to mixed economic data. Indicators such as manufacturing weakness and a decrease in consumer spending signal a slowing economy, applying further pressure on the USD. However, the resilience of the labour market keeps investors watchful, limiting the extent of the decline.
In contrast, the New Taiwan Dollar (TWD) has recently experienced a degree of stability following the central bank’s commitment to refrain from currency manipulation, which has uplifted its value against the USD. Developments affecting the TWD include mandatory clearing of interest rate swaps to enhance regulatory transparency and the response to US tariffs that could impact its exports. Market analysts suggest the TWD could benefit from its central bank’s proactive stance, although volatility remains a concern due to external economic pressures.
At present, the USD is trading near 31.44 TWD, just above its 3-month average of 30.98 TWD, reflecting a stable range over the recent months. Experts advise that potential upcoming US economic data releases could further influence market sentiment, while geopolitical risks may also play a role in shaping the USD and TWD exchange dynamics in the near future. As the market prepares for forthcoming economic indicators, traders remain vigilant about the potential implications for the USD-TWD exchange rate.
