(Bloomberg) -- The Taiwan dollar’s weakness led by global jitters over the artificial intelligence trade is masking the island’s underlying economic resilience that favors the currency’s rally into year-end, analysts say.
While the currency has come under intense pressure in recent sessions, Oversea-Chinese Banking Corp. and ING Bank NV see it rebounding to 31.60 and 31.50, respectively, implying an appreciation about 2% from current levels.
Underscoring those projections are Taiwan’s robust economic growth and current account surplus. Even though doubts over lofty AI stock valuations continue to drive outflows and weigh on the exchange rate in the short term, analysts expect fundamental trade support to prevail over the coming months.
“Record trade surpluses and AI-related exports continue to generate underlying Taiwan dollar support,” said Lin Li, head of global markets research for Asia at MUFG Bank Ltd. “But foreign portfolio outflows, outward investment and the large US dollar-Taiwan dollar yield differential is creating offsetting US dollar demand at the moment.”
Li sees the Taiwan dollar appreciating to 31.8 per greenback by year-end before gaining further to 30.9 by the end of June 2027.