AI Boom Buffers Taiwan’s Currency amidst Asian Volatility caused by Strong US Dollar

In light of the strong U.S. Dollar causing increased currency volatility throughout Asia, Taiwan has seen some relief thanks to an AI-driven technology boom. Taiwan’s currency fell only 1.7% against the U.S. Dollar in April compared to declines in the currencies of South Korea and Japan, despite the Central Bank keeping intervention amounts similar to the previous two months. Analysts attribute this to a recovering electronics and semiconductor industry providing a steady supply of dollars and a rising stock market fueled by foreign investment. While Korea and Japan expressed concerns regarding their currency weaknesses, Taiwan’s Central Bank has avoided strong messages to the market, stating that they do not require further intervention due to favorable equity performance. This stability is also credited to the absence of financial instability and a stable FX supply resulting from export growth. However, policymakers’ stance on currency could change if the U.S. Dollar strengthens again or if foreign investors lose faith in the stock market. If Fed speakers indicate later or fewer rate cuts or potential rate increases, intervention measures may become necessary once more, according to Oversea-Chinese Banking Corp.’s Christopher Wong. Taiwan’s exports to the U.S. Increased significantly in April, with shipments of information, communication, and audio-video products increasing by 81.6%. Apple supplier Hon Hai Precision Industry Co. Has contributed significantly to the Taiex index’s recent rebound.