USD/TWD Outlook:
The USD/TWD exchange rate is likely to move sideways, as it is currently near its 90-day average and within a stable range. While tariff uncertainty weighs on the USD, the TWD remains stable due to effective monetary policy.
Key drivers:
• Rate gap: The US Federal Reserve's monetary policy is uncertain amid tariff concerns, while Taiwan's central bank has maintained a stable interest rate, supporting the TWD.
• Risk/commodities: With ongoing volatility in global markets and oil prices fluctuating, the TWD's strength may be influenced by Taiwan's strong export performance amidst these changes.
• One macro factor: Predictions from the Chung-Hua Institution indicate the TWD may appreciate further, suggesting limited depreciation potential in the face of steady economic growth.
Range:
Expect the USD/TWD to hold steady within its recent range, as it has done over the past few months.
What could change it:
• Upside risk: A significant easing of tariff concerns could lead to stronger USD demand.
• Downside risk: If the TWD appreciates more than expected due to higher export growth, the USD/TWD could face downward pressure.
