Taiwan Dollar Surges as Bullish Bets Hit Highest Levels Since 2008 Amid Trade Optimism

Investor sentiment toward the Taiwan dollar (TWD) has turned decisively bullish, with long positions reaching their highest levels since 2008. The currency’s sharp appreciation in early May has sparked renewed interest from global traders, driven by speculation of policy shifts and improving trade relations with the United States.

 

Key Highlights:

 

The Taiwan dollar surged over 6% in just two sessions at the start of May, marking its steepest one-day gain in nearly four decades.

 

Bullish bets on the currency have reached levels not seen since late 2008, according to a Reuters poll of 11 analysts.

 

The rally was fueled by exporters offloading US dollars and market speculation that Taipei may permit further appreciation to facilitate a favorable trade deal with Washington.

 

Market Dynamics:

 

The dollar index has weakened nearly 7% in 2025, prompting a rotation into Asian currencies, including the TWD.

 

Foreign exchange strategists note increased hedging activity and diversification away from US assets, reflecting broader bearish sentiment on the dollar.

 

The Taiwan dollar’s strength has triggered volatility in the Taipei stock exchange and sent ripples across global FX markets.

 

Regional Impact:

 

Bullish sentiment also extended to the South Korean won, while positions on the Indian rupee were trimmed due to geopolitical tensions.

 

Analysts remain cautious about the sustainability of the rally, citing potential central bank intervention to curb excessive appreciation.

 

Outlook: With trade negotiations ongoing and currency markets in flux, the Taiwan dollar may continue to attract bullish interest, though volatility remains a key risk.

 

Sources: Reuters, Yahoo Finance, MarketScreener, ING.