Taiwan economy projected to grow 11.6% amid New Taiwan Dollar depreciation

Taiwan is experiencing a significant divergence between robust economic growth and currency weakness. While the National Development Council and private research teams like those from Cathay Financial Holding and National Taiwan University project annual GDP growth between 11.05% and 11.6%—driven largely by the global AI supply chain—the New Taiwan Dollar (TWD) has weakened significantly against the US Dollar.

Several factors contribute to this trend. Foreign investors have been selling Taiwan stocks and converting proceeds to USD, particularly following volatility in US AI-related equities. Additionally, exporters are reportedly holding onto USD reserves rather than converting them to TWD due to expectations of further depreciation. Structural pressures also exist from large-scale overseas investments by local firms and the long-term demand for USD assets by life insurance institutions.

The Central Bank of the Republic of China (Taiwan) has issued statements to address market volatility, emphasizing a policy of maintaining dynamic stability through market adjustments rather than aggressive interest rate hikes, despite the interest rate differential between Taiwan and the United States.