Taiwan Dollar Slips On Tech Selloffs But Economy Stays Strong

The Taiwan dollar is facing short-term weakness driven by global doubts about the artificial intelligence trade, even as analysts predict the currency will rebound by the end of the year.

Forecasts And Surpluses

Oversea-Chinese Banking Corp. and ING Bank NV expect the currency to rise back to 31.60 and 31.50 per US dollar. This implies an increase of about two percent from current levels. Taiwan recently hit a record high current account surplus of nearly seventy billion dollars in late 2025. Officials also raised the island's full-year economic growth forecast to more than ten percent, marking its first double-digit expansion since 2010.

Capital Outflows

These economic strengths are currently clashing with a wave of foreign capital flight. Foreign investors sold three hundred two point six billion Taiwan dollars, or nine point three billion US dollars, of local equities on Thursday. This marks the largest daily outflow on record. The selloff pushed the local currency close to its year-to-date low of around thirty-two point fifty per US dollar.

Market Factors

Other factors weighing on the currency include elevated crude prices and high US Treasury yields. US ten-year yields sit roughly three hundred basis points above Taiwanese sovereign bonds. Lin Li from MUFG Bank Ltd. notes that foreign outflows and large yield differences create heavy US dollar demand. Meanwhile, Lynn Song from ING Bank says the Central Bank of the Republic of China aims to keep the exchange rate within a comfortable thirty-one point five to thirty-two point five range. Jiuk Choi from State Street Bank & Trust Co. expects the central bank to focus on easing currency volatility. Trang Le from LGT Private Banking adds that strong export momentum and the semiconductor cycle will help push the currency upward over the medium term.

Context

Central banks often manage currency ranges during times of high market volatility to protect domestic stability without fixing a hard target. Taiwan remains a major global hub for advanced semiconductor manufacturing and chip exports. Energy imports and foreign investment flows frequently influence how local currencies react to shifting US interest rates.