The Taiwan dollar has surged, sparking talks of potential currency revaluations by some Asian nations. This move could be an attempt to ease tariff tensions with the US, as a stronger currency makes exports costlier.

The US dollar is weakening against various currencies today, including the Chinese yuan. Although China observes a holiday, the offshore yuan remains active in trading. The Hong Kong dollar has reached the strong end of its permitted trading band.

Currency Pair Analysis

The USD/TWD chart from 5 May 2025 shows fluctuations in the currency pair. Meanwhile, USD/CNH is approximately 7.1963.

What this tells us is that the Taiwan dollar has appreciated strongly — not just mildly, but enough for market participants to consider regional implications. That sort of rise has implications beyond just Taiwan; it sends a message across Asia’s trade-heavy economies. A stronger Taiwan dollar increases the cost of its exports, and when multiple countries face similar pressures, wider moves can follow. These aren’t technical blips — they’re economic signals worth noting.

The broader theme here is that the US dollar is losing ground, noticeably so. It’s slipping not only to the yuan, but to other Asian currencies too. The sentiment driving this isn’t tied to one variable — we’re seeing lingering trade friction, speculation about central bank activity, and a quiet shift in investor demand. Even while mainland China celebrates a public holiday, CNH stays active offshore. Trading doesn’t pause with the mainland’s calendar, and this suggests that the appetite to position against the greenback remains firm.

When we look at what’s happening in Hong Kong, the local dollar steadily pushes at the upper end of its trading limit. That tells us the situation isn’t confined to one or two markets. The current strength may be deliberate, or it may be a natural result of reserve inflows. Either way, these currencies don’t usually press their bands without noise. Something is steering behaviour quietly but persistently.

Turning to charts — while the USD/TWD line on the 5 May print displays volatility, it’s the underlying pattern that merits attention. Support levels have slipped, and attempts at recovery are shallow. USD/CNH holding in the region of 7.1963 is another reminder. That level is neither cheap nor elevated historically, but it reflects pressure on the dollar nonetheless. There’s nothing neutral about this hold when volume is thin from mainland desks.

Market Movements and Implications

For us, this suggests a period of positioning rather than reaction. Short-term trades need to stay nimble, but we’re entering a climate where directional bias seems warranted. Momentum in Asia FX, particularly when led by Taiwan and reinforced by offshore yuan pricing, can set tones for weeks. Watch for layered intervention, especially in pairs with tightly managed pegs. Authorities don’t tend to act loudly, but they act all the same.

As volatility in currency pairs grinds higher, especially given the dollar’s broader weakness, implieds could expand before spot moves accelerate. Hedging costs are already nudging upward in some forwards. In such an environment, delta-neutral setups may underperform unless paired with conviction on divergence. Some dislocations, especially where central banks operate with differing mandates, are becoming apparent.

We’re in a phase where rebalancing flows could distort near-term charts more than macro releases. While data always matters, policy intentions appear to be playing a larger role — even when silence prevails. Pay close attention to any surprise comments or tweaks to currency band mechanisms.

The next few sessions will hinge not only on who trades, but how. Volume, timing, and regional interbank appetite are all shifting slightly. It would be wise for us to read beyond prints and filter signals from noise, particularly since some of these moves stem from underlying policy rather than headline reactions.

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