Taiwan Dollar: Equity inflows support TWD againt US Dollar – OCBC

OCBC strategists Sim Moh Siong and Christopher Wong report that the Taiwan Dollar (TWD) has strengthened against the US Dollar (USD), briefly reaching 31.71, driven by substantial foreign portfolio inflows and robust domestic equity performance, particularly in tech and AI sectors. While these inflows may bolster TWD demand, resident outflows and potential smoothing are anticipated to moderate the appreciation rate.

On Monday, the TWD briefly rose to near 31.71 before experiencing a slight pullback. These gains were fueled by continuous foreign investments in Taiwan equities, with net purchases amounting to approximately USD372 million following a strong buying trend last week. The ongoing foreign buying warrants close monitoring; if renewed interest in the tech/AI theme persists, it could further bolster the TWD's support from Taiwan's robust export cycle.

However, resident outflows and potential market smoothing are likely to temper the pace of TWD appreciation. The bullish daily chart momentum remains intact but appears to be weakening, with the Relative Strength Index (RSI) turning lower. Consolidation is possible, with key support identified at 31.70/71 levels (21-day and 200-day moving averages, 61.8% Fibonacci retracement of the 2026 low to high range), and resistance at 31.83/86 levels (100-day moving average, 50% Fibonacci retracement).