Taiwan – TSMC, Trump and the TWD

I can't claim to have expected the 10% surge in the TWD in the last couple of days. But I have been arguing for a while that the risks of a structural appreciation of the currency were real and rising. This is a brief presentation from March that highlights the issues.

Paul Cavey

May 5, 2025

tw_themes_mar_25

tw_themes_mar_25.pptx

4 MB

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East Asia Today

An update on China's capital goods imports. They are dominated by the AI-tech trade, but underlying capital goods imports haven't fallen in the way that the weakness of FAI data would suggest. That AI tech trade isn't over yet, with Korea's 20 day exports for September rising strongly again.

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Last week, next week

The cycle isn't bad enough from Beijing's point of view to shift policy. With growth strengthening, it is reasonable to expect 25bp hikes/quarter in Japan. The BOK's dot plot looks light against nominal growth of near 30%. The CBC on hold is light when real rates across the curve are negative.

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East Asia Today

Highlights of the BOJ meeting, and charts of the CPI release. China export data for August show some weakness in EV shipments, but that is likely noise after a very strong July. PPI inflation in Korea ticked up in August, and with the rise in oil prices, is likely to be higher again in September.