US President Donald Trump’s efforts to rebalance global trade have sent shockwaves through financial markets, causing Taiwan’s currency to surge about 8% against the US dollar in just two trading sessions. This extraordinary gain, the largest daily percentage increase in approximately four decades, has significant implications for the future of the US dollar and global economy.
Taiwan’s central bank governor, Yang Chin-long, hastily convened a press conference to deny rumours of a deal with the Trump administration to strengthen the Taiwanese currency in exchange for tariff exemptions. “Stock market commentators are urged not to comment… in a speculative manner to avoid affecting the order and stability of Taiwan’s foreign exchange market and even affecting the real economy,” he stated.
The surge in Taiwan’s currency has sparked speculation about potential trade concessions to the US. However, Taiwan’s President Lai Ching-te called reports about a deal with the US on exchange rate policy “false news”. A stronger Taiwanese currency would make exports less competitive, impacting the global technology supply chain, particularly Taiwan Semiconductor Manufacturing Company, which produces over 90% of the world’s advanced microchips.
Sean Callow, senior foreign exchange analyst at ITC Markets, described the recent currency movements as “stunning” and believes the US dollar’s reputation is increasingly tarnished, which could lead to a trend of the dollar trending lower against most currencies. This would align with Trump’s strategy to restore US manufacturing dominance by making US products cheaper and more competitive overseas.
The impact is also being felt in Hong Kong, where the de-facto central bank spent $7.8 billion to buy US currency after the Hong Kong dollar hit the strong end of its trading band. The Hong Kong dollar’s value is pegged to the US dollar, an arrangement that has guaranteed financial stability and prosperity for almost four decades
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