Taiwan Dollar Holds Below Key 28 Level

Commerzbank on TWD: As the stellar performer in Asia over the past few years, TWD continues the strong performance entering the new year. USD-TWD breached below the key 28 mark, sending the Taiwanese currency to the strongest level in 23 years. As the economy runs a sizable trade surplus, plus strong equity flows to chase the semiconductor companies which are listed in onshore market, the TWD has been solidly supported and therefore a relentless appreciation is largely justified from a fundamentals' perspective.

• In the meantime, as Taiwan has just been added on the "currency manipulator watchlist" by the US Treasury, the Taiwanese central bank needs to think twice if they would want to take any big market intervention to reduce the appreciation pressure on TWD. Therefore, the market expectations remain that the TWD is likely to continue the decent rally over the foreseeable future.