OCBC strategists Sim Moh Siong and Christopher Wong report that the USD/TWD currency pair has risen nearly 2.5% this month, but its movement remains more contained compared to other Asian currencies such as KRW, THB, and MYR, which have depreciated between 3.5% and 5% against the USD. The strategists attribute the Taiwan dollar's relative resilience to 'leaning against the wind' activities by authorities and the Central Bank of the Republic of China (CBC)'s focus on maintaining currency stability to avoid imported inflation [1].
CBC Governor Yang informed lawmakers that there have been no signs of imported inflation so far, emphasizing the necessity for TWD stability to prevent such risks. He reiterated that monetary policy may need to turn tighter if inflation expectations rise, but stated it is not yet time to adopt tightening measures [1]. CBC projects the 2026 Consumer Price Index (CPI) at 1.8%, assuming an average oil price of USD 85 per barrel, but CPI could increase to 1.9% if oil prices rise to USD 100 per barrel [1].
The USD/TWD spot rate was last seen at the 32 level. While bullish momentum on the daily chart has faded, the Relative Strength Index (RSI) has risen, indicating some underlying strength. OCBC expects near-term consolidation, with resistance at 32.20 (76.4% Fibonacci retracement of the 2025 high to low) and layered support below 31.85 (21-day moving average), 31.66 (50-day moving average), and 31.50/56 (100-day moving average, 61.8% Fibonacci retracement) [1].
CONCLUSION
The Taiwan dollar has demonstrated resilience against the USD, supported by CBC's stability measures and cautious monetary policy stance. While near-term consolidation is expected, authorities remain vigilant about inflation risks, with potential tightening only if inflation expectations rise. Market participants should monitor oil prices and CBC policy signals for future direction.