Taipei: The U.S. dollar experienced a significant drop of 3.07 percent against the Taiwan dollar on Friday, marking the steepest single-day decline since 2002, as reported by dealers. The greenback closed at NT$31.064, a decrease of NT$0.953, reaching its lowest point since January 9, 2024, when it ended at NT$31.023.
According to Focus Taiwan, the Taiwan dollar emerged as the strongest-performing currency in Asia following the U.S. dollar's sharp losses. In contrast, other regional currencies showed mixed results, with the South Korean won rising by 0.81 percent, the Singapore dollar gaining 0.19 percent, the Japanese yen falling by 1.61 percent, and the Chinese yuan remaining relatively unchanged against the greenback.
Dealers noted that the U.S. dollar hit a session low of NT$30.770, prompting the central bank to step in to mitigate the losses and reduce market volatility. However, the bank's intervention in buying the U.S. dollar was limited. The central bank released a statement confirming its actions in the local foreign exchange market.
In addition to the foreign fund inflows, the U.S. dollar faced pressure from a strong performance in the local stock market, particularly in the electronics sector. The benchmark weighted index on the Taiwan Stock Exchange surged by 552.61 points, or 2.73 percent, closing at a high of 20,787.64. Foreign institutional investors purchased a net NT$38.77 billion in shares on the main board, further influencing the dollar's decline.
For the entire week, the U.S. dollar shed NT$1.462, or 4.71 percent, against the Taiwan dollar, marking its fifth consecutive week of decline in the Taipei foreign exchange market. The central bank also addressed speculation regarding potential U.S. Department of the Treasury requests to appreciate the Taiwan dollar, stating that no such requests were made.
Premier Cho Jung-tai commented on the currency's rapid appreciation, attributing the foreign exchange rate to international market conditions and highlighting the government's lack of pressure to inflate the local currency's value. Cho stressed that the Taiwan dollar's value is determined by market mechanisms.
Hsu Wen-tung, chief secretary of the Taiwan Association of Machinery Industry, expressed concerns over the stronger Taiwan dollar, citing potential impacts on the competitiveness of Taiwanese machinery exporters and possible foreign exchange losses. Hsu urged the government to stabilize the Taiwan dollar and consider measures to allow its depreciation against the U.S. dollar, especially amid uncertainties from U.S. tariff policies.