The Taiwan dollar is facing short-term pressure due to global concerns over artificial intelligence stocks, but analysts remain optimistic about its long-term prospects. OCBC Bank and ING Bank predict the currency will rebound to 31.60 and 31.50 per US dollar, respectively, implying a roughly 3% appreciation from current levels. This outlook is supported by Taiwan’s strong economic growth and a record current account surplus of nearly US$70 billion in late 2025, driven by high demand for advanced chips.
Despite these fundamentals, foreign investors have been selling Taiwan equities, with a record outflow of NT$302.6 billion on October 15. This capital flight has pushed the Taiwan dollar to its weakest point since April 2025. Analysts note that while the Central Bank of the Republic of China (CBC) may aim to keep the currency within a comfortable range of 31.5-32.5 per US dollar, it is not likely to defend a specific level rigidly.
Additional challenges include elevated crude prices, as Taiwan is an energy importer, and the significant yield differential between US 10-year Treasury yields and Taiwanese sovereign bonds. However, analysts like Trang Le from LGT Private Banking emphasize that strong export momentum and robust external balances should support the Taiwan dollar in the medium term. Near-term volatility is expected, particularly as earnings reports from major semiconductor manufacturers could influence cross-border equity flows and currency movements.
Jiuk Choi from State Street Bank & Trust highlights that the Taiwan dollar remains one of the best hedge currencies against US dollar strength, given its strong capital and current account flows and relatively low volatility. While near-term weakness is possible due to AI trade doubts, Choi anticipates a recovery to 31.80 per US dollar by the end of 2026.