A note from MUFG says the Taiwanese dollar posted its largest single-day gain since at least 1983—possibly in its history—on Friday, May 2, soaring 3.8% in a single session and 5.5% over the week. The broader Asian FX complex also rallied, led by gains in the Korean won (+1.7%), Malaysian ringgit (+1.4%), Singapore dollar (+1%), Indonesian rupiah (+1%), and offshore Chinese yuan (+0.9%).
The Taiwan dollar’s daily move was described as a 19-standard-deviation event, underscoring its rarity.
Key drivers behind the surge included:
- Renewed hopes for U.S.-China trade talks, particularly surrounding tariffs, boosted regional sentiment.
- Strong U.S. tech earnings lifted risk appetite, benefiting tech-heavy economies like Taiwan.
- Robust Taiwanese GDP data and a sharp $1.2 billion in foreign equity inflows further supported the TWD.
- Domestic hedging pressures, as insurers adjust portfolios due to a weakening U.S. dollar and asset-liability mismatches, likely contributed.
- Holiday-thinned liquidity and a rush in exporter conversions may have exaggerated the moves.
- The Taiwanese government confirmed the first round of tariff consultations with the U.S. concluded on May 1, adding a layer of policy support.
