Taiwan dollar eases after historic surge as officials deny currency talks with U.S.
Taiwanese dollar pulled back Tuesday after a historic surge that saw it clock multi-decade gains amid speculation about pressure from Washington on strengthening the local currency.
It weakened over 3% against the U.S. dollar on Tuesday, after a meteoric 9% rally over the previous two trading days to hit three-year highs, and logging its sharpest daily gains Monday since at least 1981 according to LSEG data.
Despite Tuesday's weakness, the Taiwanese dollar is still up over 8% this year against the greenback, while the U.S. dollar index is down by the same year to date.
"We're seeing currency moves more [volatile] than what we saw during the Asian financial crisis era," said David Chao, global market strategist at Invesco.
The recent dramatic upward swings in the currency were largely driven by exporters' rush to convert U.S. dollar reserves to the local currency as the U.S. dollar faltered, and life insurers' intensified hedging for their U.S. dollar debt holdings, experts said.
Taiwanese life insurers are among Asia's largest holders of U.S. bonds and have been sitting on huge, underhedged U.S. dollar exposures, according to market analysts.
Investors are closely monitoring the Taiwanese central bank as its "notable absence" has fanned speculation that the authorities were tolerating a stronger currency to win trade concessions from U.S., said Stefan Angrick, Head of Japan and Frontier Market Economics at Moody's Analytics. "The central bank has been unusually hands-off amid soaring forex volumes."
Governor Yang Chin-long said at a press conference Monday that Taiwan's central bank had stepped in to curb what it deemed as "excessive" inflows while refuting claims that exchange rates were part of the U.S. trade negotiation. He did not elaborate on the nature of intervention.
Despite official denial, foreign exchange rates might "quietly be on the table in broader U.S.-Taiwan trade conversation," Angrick said. President Donald Trump has advocated for a weaker greenback to boost U.S. export competitiveness.
Analysts are also largely skeptical of any meaningful intervention from the central bank so far. The Taiwanese dollar has already reached the upper bound of the central bank's monitoring range, Invesco's Chao said, "If the central bank continues to step back, that may be the market's cue that a quiet currency realignment is underway."
Tuesday's pullback was mostly due to the returning dollar demand by importers, according to Michael Wan, FX strategist at MUFG Bank, who believes the central bank has not intervened "very aggressively."
Separately, Taiwan's financial supervisory commission has reportedly held meetings with some of the island's largest insurers to assess the risks a weaker greenback poses to their U.S. bond holdings. Three insurers said their risk-based capital remains within regulatory standards, according to Taipei-based Economic Daily News.
Analysts see room for further gains in Asian currencies including Taiwanese dollar, betting that Trump tariffs could backfire on the American economy and that signs of progress in U.S.-China trade talks may revive trade flows in the region, supporting demand for Asian assets.
"Momentum behind TWD strength may have legs if the broader de-escalation narrative holds, [and] if tariff implication on growth proves more manageable than feared," said Christopher Wong, currency strategist at OCBC Bank. "A more market-determined TWD may be helpful during trade talks."
U.S. senior officials, including Treasury Secretary Scott Bessent, have recently sounded more upbeat about the prospects for reaching a trade deal with China. Beijing last week also signaled its openness to start trade negotiation with Washington.
Besides the Taiwanese dollar, other Asian currencies have also rallied in recent weeks as the U.S. dollar has faltered. Chinese offshore yuan hit a six-month high of 7.1834 against the greenback on Monday, before paring some of the gains on Tuesday.
"Currencies with the largest trade surpluses are more exposed to fears of a 'Plaza Accord 2.0,' and TWD is at the top of this list," said Ju Wang, head of Greater China FX & rates at BNP Paribas.
Plaza Accord refers to an agreement signed in 1985 when G5 nations agreed to depreciate the U.S. dollar against the German mark and the Japanese yen to address trade imbalances.
The Taiwan dollar's sharp rally piled on some pressure on the island's export-heavy tech sector, as a stronger local currency makes goods expensive for foreign buyers, reducing its competitiveness.
Taiwan Semiconductor Manufacturing Co shares fell for a second day, losing nearly 2% on Tuesday.
Every one percentage point of appreciation in the Taiwanese dollar is estimated to trim TSMC's operating margin by approximately 0.4 percentage point, said Brady Wang, Associate Director at Counterpoint Research. A stronger local currency reduces the value of its U.S. dollar-quoted revenue and most of TSMC's operations are in Taiwan.
The world's largest contract chipmaker gave its second-quarter earnings forecast on the assumption of a USD/TWD exchange rate of 32.5. Stock chart icon US Dollar/Taiwan Dollar FX Spot Rate
"Local chip and electronics manufacturers, which earn the bulk of their revenue in U.S. dollars, will feel the pinch as those earnings translate into fewer local dollars," said Angrick.
But strong global chip demand may still be able to cushion the blow, Angrick added, noting the artificial intelligence boom and the push for advanced chips will continue to make Taiwan a critical supplier with few close competitors.
Many exporters also appear to be well hedged. TSMC, for example, books both revenue and costs largely in dollars, while others rely on forex contracts or price adjustment clauses, said Phelix Lee, an equity analyst covering tech firms.
Taiwan Semiconductor Manufacturing Co shares fell for a second day Tuesday, losing nearly 2%, while Hon Hai Precision Industry Co gained 2.5%.
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Chicago Tribune
32 minutes ago
- Chicago Tribune
Tariffs threaten Asian beauty product boom in US
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A craze for all-in-one 'BB creams' — a combination of moisturizer, foundation and sunscreen — morphed into a fascination with 10-step rituals and ingredients like snail mucin, heartleaf and rice water. Vehicles and electronics may be South Korea's top exports to the U.S. by value, but the country shipped more skin care and cosmetics to the U.S. than any other last year, according to data from market research company Euromonitor. France, with storied beauty brands like L'Oreal and Chanel, was second, Euromonitor said. Statistics compiled by the U.S. International Trade Commission, an independent federal agency, show the U.S. imported $1.7 billion worth of South Korean cosmetics in 2024, a 54% increase from a year earlier. 'Korean beauty products not only add a lot of variety and choice for Americans, they really embraced them because they were offering something different for American consumers,' Mary Lovely, a senior fellow at the Peterson Institute for International Economics, said. Along with media offerings such as 'Parasite' and 'Squid Games,' and the popularity of K-pop bands like BTS, K-beauty has helped boost South Korea's profile globally, she said. 'It's all part and parcel really of the same thing,' Lovely said. 'And it can't be completely stopped by a 25% tariff, but it's hard to see how it won't influence how much is sold in the U.S. And I think what we're hearing from producers is that it also really decreases the number of products they want to offer in this market.' Senti Senti, a retailer that sells international beauty products at two New York boutiques and through an e-commerce site, saw a bit of 'panic buying' by customers when Trump first imposed punitive tariffs on goods from specific countries, manager Winnie Zhong said. The rush slowed down after the president paused the new duties for 90 days and hasn't picked up again, Zhong said, even with Trump saying on July 7 that a 25% tax on imports from Japan and South Korea would go into effect on Aug. 1. Japan, the Philippines and Indonesia subsequently reached agreements with the Trump administration that lowered the tariff rates their exported goods faced — in Japan's case, from 25% to 15% — still higher than the current baseline of 10% tariff. But South Korea has yet to clinch an agreement, despite having a free trade agreement since 2012 that allowed cosmetics and most other consumer goods to enter the U.S. tax-free. Since the first store owned by Senti Senti opened 16 years ago, beauty products from Japan and South Korea became more of a focus and now account for 90% of the stock. The business hasn't had to pass on any tariff-related costs to customers yet, but that won't be possible if the products are subject to a 25% import tax, Zhong said. 'I'm not really sure where the direction of K-beauty will go to with the tariffs in place, because one of the things with K-beauty or Asian beauty is that it's supposed to be accessible pricing,' she said. Devoted fans of Asian cosmetics will often buy direct from Asia and wait weeks for their packages to arrive because the products typically cost less than they do in American stores. Rather than stocking up on their favorite sunscreens, lip tints and toners, some shoppers are taking a pause due to the tariff uncertainty. Los Angeles resident Jen Chae, a content creator with over 1.2 million YouTube subscribers, has explored Korean and Japanese beauty products and became personally intrigued by Chinese beauty brands over the last year. When the tariffs were first announced, Chae temporarily paused ordering from sites such as a shopping platform owned by an e-commerce company based in Hong Kong. She did not know if she would have to pay customs duties on the products she bought or the ones brands sent to her as a creator. 'I wasn't sure if those would automatically charge the entire package with a blanket tariff cost, or if it was just on certain items,' Chae said. On its website, YesStyle says it will give customers store credit to reimburse them for import charges. At Ohlolly, an online store focused on Korean products, owners Sue Greene and Herra Namhie are taking a similar pause. They purchase direct from South Korea and from licensed wholesalers in the U.S., and store their inventory in a warehouse in Ontario, California. After years of no duties, a 25% import tax would create a 'huge increase in costs to us,' Namhie said. She and Greene made two recent orders to replenish their stock when the tariffs were at 10%. But they have put further restocks on hold 'because I don't think we can handle 25%,' Namhie said. They'd have to raise prices, and then shoppers might go elsewhere. The business owners and sisters are holding out on hope the U.S. and Korea settle on a lower tariff or carve out exceptions for smaller ticket items like beauty products. But they only have two to four months of inventory in their warehouse. They say that in a month they'll have to make a decision on what products to order, what to discontinue and what prices will have to increase. Rachel Weingarten, a former makeup artist who writes a daily beauty newsletter called 'Hello Gorgeous!,' said while she's devoted to K-beauty products like lip masks and toner pads, she doesn't think stockpiling is a sound practice. 'Maybe one or two products, but natural oils, vulnerable packaging and expiration dates mean that your products could go rancid before you can get to them,' she said. Weingarten said she'll still buy Korean products if prices go up, but that the beauty world is bigger than one country. 'I'd still indulge in my favorites, but am always looking for great products in general,' she said. Bhasin, in Menlo Park, California, plans to keep buying her face masks too, even if the price goes up, because she likes the quality of Korean masks. 'If prices will go up, I will not shift to U.S. products,' she said. 'For face masks, I feel there are not a ton of solid and reliable substitutes in the U.S.'
The Hill
an hour ago
- The Hill
Tariffs threaten Asian beauty product boom in US
NEW YORK (AP) — When Amrita Bhasin, 24, learned that products from South Korea might be subject to a new tax when they entered the United States, she decided to stock up on the sheet masks from Korean brands like U-Need and MediHeal she uses a few times a week. 'I did a recent haul to stockpile,' she said. 'I bought 50 in bulk, which should last me a few months.' South Korea is one of the countries that hopes to secure a trade deal before the Aug. 1 date President Donald Trump set for enforcing nation-specific tariffs. A not-insignificant slice of the U.S. population has skin in the game when it comes to Seoul avoiding a 25% duty on its exports. Asian skin care has been a booming global business for a more than a decade, with consumers in Europe, North and South America, and increasingly the Middle East, snapping up creams, serums and balms from South Korea, Japan and China. In the United States and elsewhere, Korean cosmetics, or K-beauty for short, have dominated the trend. A craze for all-in-one 'BB creams' — a combination of moisturizer, foundation and sunscreen — morphed into a fascination with 10-step rituals and ingredients like snail mucin, heartleaf and rice water. Vehicles and electronics may be South Korea's top exports to the U.S. by value, but the country shipped more skin care and cosmetics to the U.S. than any other last year, according to data from market research company Euromonitor. France, with storied beauty brands like L'Oreal and Chanel, was second, Euromonitor said. Statistics compiled by the U.S. International Trade Commission, an independent federal agency, show the U.S. imported $1.7 billion worth of South Korean cosmetics in 2024, a 54% increase from a year earlier. 'Korean beauty products not only add a lot of variety and choice for Americans, they really embraced them because they were offering something different for American consumers,' Mary Lovely, a senior fellow at the Peterson Institute for International Economics, said. Along with media offerings such as 'Parasite' and 'Squid Games,' and the popularity of K-pop bands like BTS, K-beauty has helped boost South Korea's profile globally, she said. 'It's all part and parcel really of the same thing,' Lovely said. 'And it can't be completely stopped by a 25% tariff, but it's hard to see how it won't influence how much is sold in the U.S. And I think what we're hearing from producers is that it also really decreases the number of products they want to offer in this market.' Senti Senti, a retailer that sells international beauty products at two New York boutiques and through an e-commerce site, saw a bit of 'panic buying' by customers when Trump first imposed punitive tariffs on goods from specific countries, manager Winnie Zhong said. The rush slowed down after the president paused the new duties for 90 days and hasn't picked up again, Zhong said, even with Trump saying on July 7 that a 25% tax on imports from Japan and South Korea would go into effect on Aug. 1. Japan, the Philippines and Indonesia subsequently reached agreements with the Trump administration that lowered the tariff rates their exported goods faced — in Japan's case, from 25% to 15% — still higher than the current baseline of 10% tariff. But South Korea has yet to clinch an agreement, despite having a free trade agreement since 2012 that allowed cosmetics and most other consumer goods to enter the U.S. tax-free. Since the first store owned by Senti Senti opened 16 years ago, beauty products from Japan and South Korea became more of a focus and now account for 90% of the stock. The business hasn't had to pass on any tariff-related costs to customers yet, but that won't be possible if the products are subject to a 25% import tax, Zhong said. 'I'm not really sure where the direction of K-beauty will go to with the tariffs in place, because one of the things with K-beauty or Asian beauty is that it's supposed to be accessible pricing,' she said. Devoted fans of Asian cosmetics will often buy direct from Asia and wait weeks for their packages to arrive because the products typically cost less than they do in American stores. Rather than stocking up on their favorite sunscreens, lip tints and toners, some shoppers are taking a pause due to the tariff uncertainty. Los Angeles resident Jen Chae, a content creator with over 1.2 million YouTube subscribers, has explored Korean and Japanese beauty products and became personally intrigued by Chinese beauty brands over the last year. When the tariffs were first announced, Chae temporarily paused ordering from sites such as a shopping platform owned by an e-commerce company based in Hong Kong. She did not know if she would have to pay customs duties on the products she bought or the ones brands sent to her as a creator. 'I wasn't sure if those would automatically charge the entire package with a blanket tariff cost, or if it was just on certain items,' Chae said. On its website, YesStyle says it will give customers store credit to reimburse them for import charges. At Ohlolly, an online store focused on Korean products, owners Sue Greene and Herra Namhie are taking a similar pause. They purchase direct from South Korea and from licensed wholesalers in the U.S., and store their inventory in a warehouse in Ontario, California. After years of no duties, a 25% import tax would create a 'huge increase in costs to us,' Namhie said. She and Greene made two recent orders to replenish their stock when the tariffs were at 10%. But they have put further restocks on hold 'because I don't think we can handle 25%,' Namhie said. They'd have to raise prices, and then shoppers might go elsewhere. The business owners and sisters are holding out on hope the U.S. and Korea settle on a lower tariff or carve out exceptions for smaller ticket items like beauty products. But they only have two to four months of inventory in their warehouse. They say that in a month they'll have to make a decision on what products to order, what to discontinue and what prices will have to increase. Rachel Weingarten, a former makeup artist who writes a daily beauty newsletter called 'Hello Gorgeous!,' said while she's devoted to K-beauty products like lip masks and toner pads, she doesn't think stockpiling is a sound practice. 'Maybe one or two products, but natural oils, vulnerable packaging and expiration dates mean that your products could go rancid before you can get to them,' she said. Weingarten said she'll still buy Korean products if prices go up, but that the beauty world is bigger than one country. 'I'd still indulge in my favorites, but am always looking for great products in general,' she said. Bhasin, in Menlo Park, California, plans to keep buying her face masks too, even if the price goes up, because she likes the quality of Korean masks. 'If prices will go up, I will not shift to U.S. products,' she said. 'For face masks, I feel there are not a ton of solid and reliable substitutes in the U.S.'
Yahoo
an hour ago
- Yahoo
Trump Weighs Whether to Let Taiwan Leader Transit Through US
(Bloomberg) -- The Trump administration is debating whether to allow a planned US stopover by Taiwan's leader next week as concerns mount that it could derail trade talks with China and a potential summit with President Xi Jinping, according to people familiar with the matter. The High Costs of Trump's 'Big Beautiful' New Car Loan Deduction Can This Bridge Ease the Troubled US-Canadian Relationship? Budapest's Most Historic Site Gets a Controversial Rebuild Trump Administration Sues NYC Over Sanctuary City Policy Taiwanese President Lai Ching-te was planning to stop in New York on Aug. 4 and then Dallas 10 days later as part of a trip to diplomatic allies Paraguay, Guatemala and Belize, Bloomberg reported earlier this month. Planning for the trip was thrown into flux late last week when Taiwanese officials couldn't get their US counterparts to give the green light, the people said. The hesitation over allowing Lai's trip has unnerved some officials in the US as well as in Taipei who fear President Donald Trump may concede too much to China as he seeks a meeting with Xi, the people said. Bloomberg reported earlier that Trump's administration was reaching out to CEOs to accompany him on a possible trip to Beijing later this year. The White House and US State Department didn't reply to requests for comment made outside normal working hours. 'Any such claims are pure speculation, based on incorrect information,' said Lii Wen, a spokesperson of the Presidential Office in Taipei. 'The Presidential Office announces relevant plans publicly after all arrangements have been confirmed.' The US has delayed such trips in the past, and could yet suggest an alternative timeframe and layover locations. Last year, Lai pushed back a planned transit through Hawaii and Guam by several months following a Biden administration request to wait until after the US election, according to a person familiar with the matter. Lai's planned visit comes at a delicate diplomatic moment. US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng on Monday are convening their trade teams in Stockholm to advance talks for a deal with ramifications for global markets. An extension of a trade truce reached between both sides is expected and would help pave the way for a Trump-Xi meeting. China, which has branded Lai a 'separatist' and 'parasite,' views Taiwan as the most sensitive issue in relations with other countries. It has increasingly opposed US interactions with Taiwanese leaders, in particular by staging large-scale military exercises surrounding the island following former US House Speaker Nancy Pelosi's visit to Taipei in 2022. Any hesitation from Trump over transits by Taiwan's president will fan concerns that Washington's position on the self-ruled democracy, which Beijing considers a renegade province, could become a trade war bargaining chip. In an abrupt policy reversal, Trump already put on the negotiating table some tech curbs imposed on China over national security concerns. While the US doesn't have official ties with Taiwan, it's legally obliged to provide weapons for the island's self-defense and is Taiwan's top supplier of military equipment. 'The fact that at least some in the administration are putting our partnership with Taiwan on the table with Beijing is deeply concerning, and sends a dangerous message to Beijing,' said Laura Rosenberger, a former US diplomat who also chaired the American Institute in Taiwan until this year. 'At a time when Beijing is engaging in increasingly coercive behavior toward Taipei, the US needs to be sending a clear message of commitment to longstanding precedents, not allowing Beijing to once again move the goalposts.' Embattled Leader Lai, who won last year's presidential election with the lowest winning percentage since 2000, also risks looking weak at home and abroad. Last weekend, a failed attempt to unseat lawmakers handed the opposition more ammunition for its agenda, which includes forging closer ties with Beijing. Adding to the uncertainty, Taiwan's trade officials are currently in Washington for talks aimed at clinching a deal to avert a threatened 32% tariff. All of Taiwan's sitting presidents since the 1990s have traveled to the US on stopovers en route to other destinations. While most visits passed without triggering heightened tensions, a trip by then-leader Lee Teng-hui to speak at Cornell University in 1995 sparked the so-called Third Strait Crisis, with China firing missiles into waters near the main island of Taiwan. Stopover requests, on occasion, have been used as a way for US leaders to signal displeasure with Taiwan's policy. The most prominent example of that came in 2006, when then-US President George W. Bush scuttled Chen Shui-bian's request to transit to Paraguay via either New York or San Francisco. That snub was taken as a sign his unofficial relationship with Washington had suffered a serious blow, after Chen upset the Bush administration with a series of pro-independence policies that risked provoking China. Lai's New York and Dallas stops would mark his first to continental US soil since he became president last year and Trump took power in January. His transits in Hawaii and Guam last December were followed by what Taipei described as China's largest naval deployment in years along the first island chain, which also includes Japan and the Philippines. US State Department spokeswoman Tammy Bruce told reporters earlier this month that layovers by Taiwanese presidents are routine. 'Transits of the United States by high-level Taiwan officials, including presidents are in line with past practice and fully consistent with our longstanding policy,' she said. --With assistance from Eric Martin and Ben Sills. (Updates with comment from former diplomat in 12th paragraph) Burning Man Is Burning Through Cash It's Not Just Tokyo and Kyoto: Tourists Descend on Rural Japan Elon Musk's Empire Is Creaking Under the Strain of Elon Musk Confessions of a Laptop Farmer: How an American Helped North Korea's Wild Remote Worker Scheme Scottish Wind Farms Show How to Counter Nimby Opposition ©2025 Bloomberg L.P. 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