USD/TWD rose nearly 2.5% this month, but the move was smaller than in other Asian currencies such as KRW, THB and MYR, which fell about 3.5% to 5% against the US dollar. The pair was last seen around the 32 level.
The Central Bank of the Republic of China (Taiwan) said it has not seen signs of imported inflation so far and stated that the Taiwan dollar needs to remain stable to prevent imported inflation. It also said monetary policy may need to tighten if inflation expectations rise, but no tightening measures have been adopted yet.
The central bank projects 2026 CPI at 1.8% based on an average oil price of USD85 per barrel. It said CPI could rise to 1.9% if oil reaches USD100 per barrel.
Market indicators showed daily bullish momentum fading while the RSI rose. The near-term view was for consolidation, with resistance around 32.20 and support at 31.85, 31.66, and 31.50/56.
The Taiwan dollar has shown notable strength, with USD/TWD rising only 2.5% last month. We see this as resilient when compared to the Korean Won and Thai Baht, which fell against the dollar by 4.2% and 3.8% respectively in March 2026. This relative stability is likely due to active management by Taiwan’s central bank.
The Central Bank of China (CBC) is clearly focused on preventing imported inflation, which a stable currency helps achieve. With Taiwan’s latest February CPI data coming in at 2.1%, slightly above the bank’s own 1.8% target for the year, we expect them to continue smoothing out any sharp currency weakness. This suggests the odds of the dollar breaking significantly higher against the TWD are low for now.
For derivative traders, this points towards strategies that benefit from low volatility and a range-bound market in the coming weeks. Selling short-dated volatility through strategies like short straddles or iron condors on USD/TWD could be favorable. The defined resistance at 32.20 and strong support layers down to 31.85 create a predictable channel to trade within.
Looking back at the volatility we saw during parts of 2025, the current expectation for consolidation offers a distinct change of pace. However, the main risk to this view is energy prices, with Brent crude currently trading around $86 per barrel. A sustained move towards $100 could force the CBC to reconsider its policy and break the currency out of its current range.
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