Currency shocks

The story of the day comes form the East, where the Taiwanese dollar has surged around 5% overnight. Several factors appear to have driven this appreciation: (1) Trade Speculation: Markets are betting that Asian countries, including Taiwan, might revalue their currencies to secure trade deals with the U.S., boosting demand for the Taiwan dollar. (2) Capital Inflows: There’s evidence of “hot money” flowing into Taiwan, possibly encouraged by perceived U.S. pressure, though Taiwan’s central bank denies this. (3) Economic Growth: Upbeat growth data from Taiwan likely increased confidence, supporting the currency’s value. (4) Global Tech Strength: Strong earnings from U.S. tech firms, many with operations in Taiwan, seem to have increased demand for the Taiwan dollar. (5) Trade Tension Easing: Optimism about easing U.S.-China trade tensions may have contributed to the surge. 27 years ago, the abrupt weakening of some Asian currencies, like the Thai Baht and the HK dollar blew up the Long Term Capital Managment, one of the biggest and more leveraged funds at the time. These markets shocks will put everyone’s risk management skills to the test.

Want to know more? You can find all our posts at https://www.myfundamental.net/insights

#iamfundamental #soyfundamental #wealthmanagement #familyoffice #financialadvisor #financialplanning

#policymistake #ratecut #stagflation