The New Taiwan dollar (TWD) is the official currency of Taiwan. Also referred to as the Taiwanese dollar, the TWD plays a major role in the Taiwanese economy and on the global forex market. In this comprehensive guide, we will take an in-depth look at the history, overview, exchange rates, economic factors, forecasts, and trading strategies for the New Taiwan dollar.

A Brief History of the TWD

The New Taiwan dollar was first issued by the Bank of Taiwan in 1949, replacing the Old Taiwan dollar. The currency was initially pegged to the U.S. dollar at a rate of TWD 40 to USD 1. However, in the 1950s and 60s, the TWD saw inflation erode its value until a major currency reform took place in 1961. This reform re-established the peg to the dollar at TWD 40 = USD 1.

Over the next few decades, the exchange rate against the dollar remained stable. However, in the late 1980s, Taiwan gradually loosened the peg and eventually switched to a managed float system in 1989. This gave the central bank more flexibility in monetary policy as the TWD was now determined by supply and demand.

Some key events for the TWD include:

  • 1949 – New Taiwan dollar introduced pegged to USD
  • 1950s-60s – High inflation erodes TWD value
  • 1961 – Currency reform re-pegs TWD at 40 to USD 1
  • 1988 – Crawling peg introduced
  • 1989 – Managed float exchange rate adopted

Since 1989, the TWD has fluctuated against major currencies but remained relatively stable compared to other Asian currencies. The central bank occasionally intervenes to prevent large swings.

TWD Overview and Current Exchange Rates

The New Taiwan dollar is the 13th most traded currency worldwide. As of August 2023, the current TWD exchange rates against major currencies are:

  • 1 TWD = 0.032 USD
  • 1 TWD = 0.031 EUR
  • 1 TWD = 4.119 JPY
  • 1 TWD = 0.217 CNY

The New Taiwan dollar is issued by the Central Bank of the Republic of China (Taiwan). The currency code is TWD and the symbol is NT$. The subunits are sens and fen, with 1 TWD = 100 sens = 10 fen. However, sens are rarely used in practice.

TWD banknotes come in denominations of NT$100, NT$500, NT$1,000, and NT$2,000. Coins are issued in denominations of NT$0.5, NT$1, NT$5, NT$10, NT$20, NT$50, and NT$100.

As a managed floating currency, the TWD is largely determined by the forces of supply and demand in the foreign exchange market. However, the central bank occasionally intervenes to prevent drastic fluctuations in the currency’s value relative to the U.S. dollar. This provides some stability and predictability for the TWD.

Factors That Influence TWD Exchange Rates

There are several key economic and political factors that can impact the supply and demand for the New Taiwan dollar, causing its exchange rates to shift.

Taiwan’s Economic Performance

Taiwan has a strong export-driven economy, with major industries like electronics and semiconductors. If Taiwan’s economic growth and outlook improves, it can boost confidence in the TWD and cause it to appreciate against other major currencies. Conversely, a weakening economy can undermine the TWD.

Monetary Policy

Taiwan’s central bank uses monetary policies like interest rates and money supply to ensure price stability and economic growth. Lower interest rates tend to weaken a currency by increasing the money supply. Higher rates have the opposite effect. Changes to Taiwan’s monetary policy affect TWD rates.

Political Stability with China

Relations between Taiwan and China have major implications for Taiwan’s economy and currency. Periods of rising tensions with China undermine investor confidence in the TWD, while improved relations support the currency’s strength.

U.S. Economic Performance

Due to strong trade ties, the economic health of the United States, Taiwan’s second largest trade partner, impacts Taiwan’s economy. A stronger U.S. economy supports Taiwan exports, boosting the TWD.

Relative Interest Rates

The interest rate differential between Taiwan and other major economies like the U.S. impacts currency flows. Higher interest rates in Taiwan can attract foreign capital inflows, lifting the TWD.

TWD Forecasts

Based on its current outlook, most analysts expect the Taiwan dollar to remain relatively stable against the U.S. dollar over the next year, fluctuating mildly between 29-32 TWD per 1 USD.

In 2023, Taiwan’s economy is projected to grow around 2.5%, supported by strong exports and domestic demand. This should provide backing for the TWD. Stable relations with China are also expected this year.

While the U.S. Federal Reserve is forecasted to keep raising interest rates, Taiwan’s central bank is unlikely to hike rates dramatically higher. This should limit significant fluctuations in the TWD-USD exchange rate.

Some threats to the TWD include potential global economic headwinds that could undermine exports. Also, any rise in tensions with China could destabilize the currency. However, barring major negative shocks, the TWD appears well-positioned looking ahead.

Trading the TWD

The New Taiwan dollar offers unique opportunities for forex traders looking to diversify their portfolios. Here are some tips for trading TWD.

Understand Drivers of Volatility

Pay close attention to economic data, central bank policy shifts, and political news that can cause fluctuations in the TWD. Stay up-to-date on factors like Taiwan’s exports, GDP growth, interest rates, and China relations.

Follow Central Bank Intervention

Watch for the central bank to intervene when the TWD strays too far from equilibrium rates against the dollar. Intervention can influence short-term exchange rate movements.

Use Risk Management Strategies

Given the periodic volatility, use prudent risk management like stop losses. TWD volatility may rise during times of uncertainty, warranting reduced position sizes.

Consider Pair Trades

When the Taiwan dollar diverges from fundamentals, consider pair trades to exploit mean reversion. For example, buy TWD and sell USD when TWD appears undervalued.

Trade TWD Crosses

Beyond the dollar, look for opportunities in TWD crosses like TWD/JPY and TWD/EUR based on economic and rate differentials.

With in-depth research and measured risk-taking, trading the oscillating TWD can diversify forex portfolios. Keep abreast of all the factors swaying Taiwan’s currency.


The New Taiwan dollar is an important Asian currency that provides unique trading opportunities based on Taiwan’s economic climate and global standing. With prudent analysis of economic conditions, central bank policy, political ties, and market risks, traders can capture profits from TWD’s fluctuations against the U.S. dollar and other major currencies. Pay close attention to interest rate differentials, export competitiveness, China relations, and central bank intervention to stay ahead of market movements. While the TWD has seen periodic volatility, its overall stability makes it attractive for diversifying exposure and enhancing returns. By incorporating the Taiwan dollar into a balanced forex trading approach, participants can more effectively navigate the currency’s ups and downs.