Taiwan Dollar Fluctuates, Will Central Bank Allow Currency Appreciate?

The Taiwan dollar fluctuated today as the impact of the general negative sentiment on the Forex market battled with the influence of speculation that the nation’s central bank will allow the currency appreciate.

Analysts speculate that Taiwan’s central bank will tolerate gains of the currency to stem growth of inflation even as the strong currency puts pressure on exporters. Inflation accelerated to 1.44 percent in April from a year ago after consumer prices increased 1.25 percent in March. At the same time, exports declined 6.4 percent last month from a year earlier, compared with the 3.2 percent drop in the month before.

Taiwan dollar considered to be a risky currency and as such suffers from risk-off sentiment on FX market. Elections in various countries of Europe create a sense of uncertainty and traders don’t like to risk in such an environment. The uncertainty is likely to persist for some time as the past elections in France and Greece will be followed by votes in Italy and Ireland.

USD/TWD was up from 29.3320 to 29.3400 as of 2:05 GMT today. The daily minimum was 29.3270, while the maximum was 29.3650.

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