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The New Taiwan Dollar has weakened in the short term due to the withdrawal of foreign investment and concerns about AI, but Taiwan’s strong exports, current account surplus and semiconductor demand still support many foreign banks’ optimism for a rebound at the end of the year.
Doubts about AI investments led to several days of overselling of foreign investmentstaiwan stock The New Taiwan dollar fell to 32.550 yuan against the US dollar on Monday, the lowest level since April 2025, lagging all Asian currencies. However, Bloomberg quoted analysts as saying that Taiwan’s strong economy and exports would still helpexchange rate On the rebound, OCBC Bank and ING expect it to rise to 31.60 yuan and 31.50 yuan before the end of the year, an increase of about 3%.
OCBC Bank strategist Christopher Wong said the Taiwan dollar’s weakness “is still mainly due to capital outflows.” Taiwanese shares fell on Monday, adding to depreciation pressure, but he believes intraday fluctuations are severe enough that the central bank may intervene at some point.
The New Taiwan dollar has been under heavy devaluation pressure in recent days, but Taiwan’s strong economic growth and current account surplus still support analysts’ bullish expectations. Although concerns about high AI stock prices are accelerating capital outflows and dragging down exchange rates in the short term, analysts expect support from the business to gradually emerge in the coming months.
“Record-breaking trade surplus and AI-related exports continue to provide support to the New Taiwan dollar. However, the withdrawal of foreign capital from the stock market, outward investment of funds and the wide interest rate differential between the US dollar and the New Taiwan dollar are also currently generating demand for the US dollar, offsetting some of the support,” said Lin Li, head of Asia global market research at MUFG Bank.
Li Lin estimates that the New Taiwan dollar will rise to 31.8 yuan against the US dollar by the end of the year, and to 30.9 yuan by the end of June 2027. The New Taiwan dollar fell to its lowest since April 2025 on Monday, after foreign investors sold off Taiwanese shares for several days last week.
Unprecedented global demand for advanced chips has pushed Taiwan’s current account surplus to nearly US$70 billion by the end of 2025, a record high, before easing slightly in recent months. The government also raised Taiwan’s full-year economic growth forecast to more than 10%, which is expected to reach double-digit growth for the first time since 2010.
However, these fundamental advantages are coming under pressure from massive outflows of foreign capital. Foreign investors sold more than 302.6 billion yuan (about US$9.3 billion) of Taiwanese stocks on Thursday, setting a one-day record and pushing the New Taiwan dollar to almost this year’s low of about 32.50 yuan per US dollar.
Analysts do not regard this price as a line of defense that the central bank should defend, but they are still watching closely because it appears to be a more acceptable exchange rate range for the central bank.
Lin Song, chief economist at ING Greater China, said: “The central bank will try to keep the Taiwan dollar within a relatively limited range. I don’t think there is a line of defense that should be defended, but so far this year, 31.5 to 32.5 yuan seems to be a more acceptable range for the central bank.”
Jiuk Choi, Asia Pacific general economic strategist at State Street Bank, believes the central bank is more likely to focus on reducing exchange rate fluctuations rather than curbing specific prices. “Nevertheless, we believe USD/NT$32.4 to NT$32.5 is an important value level as it is the high point for the US dollar exchange rate since 2026,” he said.
In addition to concerns about the technology industry, Taiwan’s reliance on energy imports and high oil prices have also put pressure on the New Taiwan Dollar. Furthermore, the U.S. The 10-year Treasury bond yield is about 300 basis points higher than Taiwan’s Treasury bond of the same year. The yield differential attracts money, which continues to support the US dollar and depress Asian currencies.
Trang Le, foreign exchange and interest rate expert at LGT Private Bank, said: “Short-term adverse factors include the withdrawal of foreign capital from Taiwan stocks and the tightening stance of the Federal Reserve, which increases the strength of the US dollar.” He added: “Nevertheless, strong exports, solid external balance of payments and AI-driven semiconductor boom still make the New Taiwan Dollar more likely to appreciate in the medium term. We expect the exchange rate to remain largely volatile rather than weakening.”
Currency traders are paying attention to financial reports from major semiconductor companies, which strategists believe will be the next key to influencing cross-border stock market fund and currency fluctuations. TSMC announced a better-than-expected revenue outlook on Thursday, but that hasn’t yet fully addressed market concerns about the overall AI manufacturing boom.
Cui Zixu said: “The upcoming global technology industry financial report may intensify the volatility of the New Taiwan Dollar, especially because the market is currently more sensitive to AI-related capital expenditure, profitability and competition from mainland China.”
He believes concerns about AI investment could cause the Taiwan dollar to decline further in the short term, but he expects it to reach 31.80 yuan per US dollar before the end of the year.
