Whenever you are interested in an exchange rate you are actually interested in two currencies due to the fact that the value of a currency must always be quoted in comparison to a second currency.
So it follows that if you are determining the best time to transact, in this case the USD vs TWD, you should pay attention to both United States Dollar and New Taiwan Dollar news and forecasts.
14-December-18: Against a basket of currencies, the US dollar struck an 18-month high in mid-December after negative political and economic developments weighed on rest-of-the-world currencies. At the time of writing, the dollar was showing trade-weighted appreciation of 6 percent for 2018 and was on course to gain in 10 of the year’s 12 months.
The dollar had strengthened to levels near $1.13 against the euro, which suffered due to disappointing eurozone economic data and Brexit-related uncertainties.
Brexit allowed the dollar to gain handsomely against the pound in 2018. On December-11, GBP/USD traded below 1.25 for the first time since early 2017.
The economic slowdown in China has also helped the dollar by creating safe haven flows into the US. The dollar has yet to reach the magic 7-yuan level but remains close to it, at levels near 6.9.
For 2019, JP Morgan and Morgan Stanley are both bearish the greenback. The banks remain skeptical over future Fed interest rate hikes and point to a possible US economic downturn in the second half of the year.
Scotiabank is forecasting EUR/USD at $1.30 by 2019 year-end, indicating a potential 13 percent decline in the dollar’s buying power.
Towards the end of October, against the US dollar, the Taiwan dollar was sitting on a year-to-date loss of 4.2 percent, at 31.0 per USD, near to 20-month lows. It was 1.4 percent higher on the year versus the euro, at 35.16 per EUR.
US-China trade tensions have prompted foreign investors to dump Taiwanese stocks, especially those providing supply-chain products, and this capital outflow has weighed on TWD.
The Taiwanese central bank can do little to support the currency with inflation at just 1.7 percent (year to October) and with marginal improvements in inflation mostly the result of volatile energy prices.
In October, ING forecast USD/TWD at 31.0 at year-end. Although this represents no change on rates at the time of writing, for ING it represents a big downward revision in TWD expectations.