Taiwan turmoil: what drove the TWD surge?

Foreign speculators, carry unwinds and central bank inaction fuelled the 10% move, not just life insurers, say traders

A rolled-up Taiwanese dollar launching into space as if it were a rocket
Credit: Risk.net montage

When the New Taiwan dollar (TWD) surged unexpectedly on May 2 and 5, the country’s giant life insurers were immediately blamed for the move, given their huge size relative to the Taiwanese domestic market.

Market participants, however, have mixed views on how active the insurers really were – but they agree the moves were exacerbated by hedge funds betting on the currency’s rise after the central bank decided not to intervene aggressively to halt its wild appreciation.

“This has been driven by

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