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The Taiwan dollar surged the most in nearly four decades as a combo of upbeat growth data, bets on easing trade tensions and strong US tech earnings turbocharged currency gains.

It closed about 3% higher against the greenback at 31.06 on Friday, marking the currency’s largest one-day advance since 1988. The island’s benchmark stock index also climbed 2.7% to outperform the region’s equity gauges.

The Taiwan dollar, which rarely makes headlines, was at the center stage of currency market on Friday as sentiment toward the island’s assets dramatically improved after China said it’s assessing possible trade talks with the US. Data showing the island’s economy expanding at a faster-than-expected pace and hopes that US tech giants will import more semiconductors from the region also helped to fan optimism.

Local exporters also provided some tailwind for the rally, as they sold the greenback frantically amid the sudden appreciation, according to traders. That happened just as the usual buyers of the US dollar stepped back from the market, creating a feedback loop that exaggerated the move, they added. The traders asked not to be identified as they can’t comment on the FX market publicly.

“The faster-than-expected pace of Taiwan dollar appreciation caught many market participants off guard, prompting a rush to convert US dollars into local currency,” said Christopher Wong, a strategist at OCBC Bank. “The recent Taiwan dollar gains have also been catalyzed by prospects of dialog between US and China.”

The rally came even as Taiwan’s state-backed banks bought the greenback in the afternoon, though the overall operation remained in line with the usual activities, the traders said. Demand for the US dollar coming from importers and foreign investors failed to offset aggressive and continuous selling by the exporters, they added.

Managers of exchange-traded funds were also seen selling the greenback, as domestic clients sought to redeem their investments in offshore securities, the traders said.

The rapid appreciation is backed by largest volumes for greenback-Taiwan dollar non-deliverable forwards, which are making a rare appearance at the top of global trading charts. The transaction volume in the spot market on Friday was the second largest so far in 2025.

Still, there was no aggressive or abnormal intervention by the central bank, traders said. The monetary authority usually intervenes to iron out volatility amid wild swings in the currency market.

The island’s central bank reiterated on Thursday that the US Treasury hasn’t asked Taiwan to appreciate its currency.

Upbeat Growth

The surge on Friday propelled the Taiwan dollar to the top of emerging Asian currency rankings this year, with a gain of over 6% versus the greenback. Other Asian currencies have also advanced amid the trade optimism, with the South Korean won and Indonesian rupiah up more than 1% on Friday.

The euphoria came as China’s Commerce Ministry said earlier in the day that it had noted senior US officials repeatedly expressing their willingness to talk to Beijing about tariffs and urged officials in Washington to show “sincerity.” Beijing’s seemingly softer stance is good news for Taiwan given its close trade and political ties with the world’s top two economies. 

Friday was also the earliest investors could react to Taiwan’s release of its fastest pace of growth in a year in the first quarter, as the financial markets were closed Thursday for a public holiday.

For Taiwanese stocks, strong US tech earnings are a significant driver, as Microsoft Corp and Meta Platforms Inc lead Magnificent Seven stocks higher on Thursday.

“Microsoft and Meta’s capex came better than expected, suggesting that the AI demand remains strong, which will benefit overall chip demand and Taiwan Semiconductor Manufacturing Co’s revenue,” said Jeff Pu, analyst at GF Holdings Hong Kong Corp. 

Looking ahead, analysts are cautious about whether the rally would continue. Khoon Goh, head of Asia research at Australia & New Zealand Banking Group, said the Taiwan dollar will face strong resistance at 31.

Gains in Taiwan dollar will slow down from the current level as the greenback remains as a key reserve currency, said Kiyong Seong, a macro strategist at Societe Generale SA in Hong Kong. “A further decline in USD/TWD hinges on the market perception on dollar assets including US Treasuries.”

With assistance from Winnie Hsu, Miaojung Lin and Mark Cranfield.

©2025 Bloomberg L.P.

This article was generated from an automated news agency feed without modifications to text.

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