TAIPEI (Taiwan News) — The Taiwan dollar reached its strongest level in more than three years on Monday, closing at NT$29.52 against the US dollar.

A lower exchange rate indicates a stronger Taiwan dollar, as fewer local currency units are needed to purchase one US dollar. Forex traders attributed the appreciation not to major foreign capital inflows, but to limited demand for the greenback, according to CNA.

With relatively subdued market activity, Taiwan’s Central Bank adopted a hands-off stance, allowing the currency to strengthen gradually without major intervention.

The US Dollar Index fluctuated as investor appetite for dollar-denominated assets waned. Analysts cited increased risk aversion following escalating tensions between Israel and Iran.

Meanwhile, remarks by President Donald Trump advocating a return to unilateral tariffs added to downward pressure on the dollar, as markets reacted to the potential implications for global trade.

While a stronger Taiwan dollar benefits importers by lowering the cost of foreign goods, it presents challenges for Taiwan’s export-driven economy. An appreciating currency can make Taiwanese goods more expensive in global markets, potentially curbing overseas demand and eroding competitiveness.

Looking ahead, analysts expect the Taiwan dollar to maintain its upward momentum in the near term. However, they caution that shifts in global monetary policy and developments in the Israel-Iran conflict—particularly their impact on oil prices—will continue to influence currency trends.