How will the exchange rate of the Taiwan dollar and the US dollar go in 2021?

　　How will the exchange rate of the Taiwan dollar and the US dollar go in 2021?

　　Since 2021,the U.S.economy has improved and the U.S.dollar index has rebounded,but the Taiwan dollar has not seen a depreciation or even appreciated all the way to a new high in 24 years.Asian currencies and even non-U.S.currencies such as the euro and the British pound are also performing strongly,and their appreciation momentum is clearly ahead.

　　There are three main reasons affecting the trend of the Taiwan dollar and the U.S.dollar in 2021,namely,the Fed's policy,foreign investment trends and the central bank's attitude.Since the beginning of this year,the Federal Reserve has begun to reduce the pace of QE,and then it has given an expectation of raising interest rates next year,which has formed a positive support for the US dollar index,while the Taiwan authorities no longer intervene in exchange rate control and this year due to the epidemic This year,the manufacturing activities of major global economies have suffered serious setbacks.Compared with Taiwan,Taiwan The stable economic environment and strong export industry have also attracted many foreign investors to buy more Taiwan dollars.

　　It can be seen from the chart that since the beginning of this year,the new US dollar has experienced an obvious downward trend against the Taiwan dollar,and the rise of the Taiwan dollar has been relatively strong.In March,a wave of the US dollar rose against the Taiwan dollar.The ratio is still the best anti-depreciation performance.

　　Here is an explanation of how the Taiwan dollar and the US dollar against the Taiwan dollar look.First of all,as a member of non-US currencies,the US dollar against Taiwan dollar(USD/TWD)is based on the US dollar"1 yuan",indicating how much Taiwan dollar can be exchanged for 1 US dollar,or how much Taiwan dollar is needed to buy 1 US dollar,the same New Taiwan dollar is basically The unit is also"circle".The trend that affects the New Taiwan dollar is mainly the trend of Taiwan's economy and the US dollar index.Because Taiwan's economy is mainly dependent on exports,and has the characteristics of small economic scale and frequent capital movement,if the exchange rate of Taiwan dollar fluctuates too much,it will damage its enterprises and the overall economy.The global economic sentiment and the policy of the US central bank are One of the most important influencing factors on the trend of USD/NTD.

　　Since the beginning of this year(USD/TWD has fallen from a high of around 28.60 at the beginning of the year to around 27.70 at present,it means that the US dollar has depreciated relative to the Taiwan dollar,while the Taiwan dollar has appreciated relative to the US dollar.

　　As can be seen from the figure,the US dollar index has formed a relatively large double-dip trend this year.Market investors are focusing on the global central bank's attention to inflation and the policy direction of currency bar regulation.Approaching the time to tighten monetary policy,economies such as Brazil,Canada,South Korea have started raising interest rates,and the United Kingdom has also been continuously releasing signals to tighten monetary policy.The Federal Reserve,which is the bellwether of the global central bank,is also about to announce the start of debt reduction.The global monetary easing environment since the outbreak of the epidemic in 2020 is about to change.

　　On the other hand,due to the gradual recovery of most economies from the quagmire of the epidemic,coupled with the global energy supply crisis,the stock market,commodity and cryptocurrency market sentiment is still improving,which also restricts investors to hold US dollars to a certain extent.The interest in cash,coupled with the threat to global supply chains and economic recovery from rising commodity prices,makes holding cash unattractive,leading to a hesitant or even correction in the U.S.dollar.

　　From the overall situation,the short-term correction will not affect the pattern of the dollar's mid-term strength,unless the Fed delays the time to reduce debt or raise interest rates,it will constitute a shaking foundation for the dollar's rise.

　　Dollar Trend in 2021 and Recent Years

　　Since 2019,the US dollar index has stepped out of a relatively obvious downward trend.Although the rebound this year is not weak,it is still in depreciation from the general trend.The sharp depreciation of the US dollar in 2019-2020 was mainly due to the impact of the new crown epidemic.In order to deal with the economic damage caused by the sudden medical and health events,the then US President Trump had to print a lot of money and invest cash to activate the market.The economy is known professionally as"quantitative easing",or QE for short.As the economy gradually emerges from the quagmire of the epidemic in 2021,the side effects of QE—inflation have also begun to appear.The Federal Reserve has begun to consider tightening monetary policy.It is expected to reduce bond purchases this year and raise interest rates next year.The dollar is here On the premise of good news,it gradually stopped falling and began to walk out of a large double bottom.

　　Although the US dollar has rebounded since the second half of this year,it has recently ignored the positive performance and has relatively declined.Earlier,the frequent hawkish remarks by Federal Reserve Chairman Powell could not make the US dollar rise as expected,indicating that high inflation has suppressed investors'enthusiasm for the US dollar to a certain extent.And before the Fed's interest rate decision in early November,the dollar is likely to continue to maintain a weaker trend.

　　How the dollar will behave in the near future,we can find some clues from Powell's recent speech.

　　As early as October 22,Powell attended a panel discussion at an online meeting and conveyed a similar view that"it is time to shrink debt,but inflation is still a headache".This remark once stimulated the US dollar index to test above 93.70..

　　Through the interpretation of Powell's more"hawkish"remarks at the time,the general interpretation of the market is that the Fed will start to reduce the size in November.At the same time,the pace of the reduction may be faster than the market's expectations,and the expectation of interest rate hikes will also be earlier.However,the U.S.index quickly gave up its gains after Powell's speech.The reason for the decline in the U.S.index is that the market has fully expected that the Fed will begin to reduce debt in November and raise interest rates before the end of next year.Before the release,it is difficult for investors to generate new buying enthusiasm for the US index,which may continue to correct the gains in the past few months.Before the next Fed rate decision on November 3,the dollar may fall into a sustained low consolidation with a high probability.This is a manifestation of the phase-out of benefits before the lack of new benefits.

　　The trend of Taiwan dollar in recent years in 2021

　　The average exchange rate of the US dollar against the Taiwan dollar(USD/TWD)in the past two years was 30.300,and after hitting a one-and-a-half-year high of 31.820 on August 5,19,it fell all the way to 29.300.Taiwan dollar depreciates.

　　The COVID-19 epidemic that began in 2020 has hit the global economy hard.Taiwan’s economy has been able to grow against the trend and its exports have increased significantly because of the epidemic prevention.Its economic fundamentals are stable,Taiwan stocks have the advantage of lower interest rates,and the wave of Taiwanese businessmen returning and foreign investment Due to the continuation of several major factors,the exchange rate of the New Taiwan dollar has skyrocketed.USD/TWD was still above the 30 yuan price at the beginning of last year,and fell below 28.1 yuan at the end of last year.Compared with the US dollar,the total appreciation of the New Taiwan dollar was 1.598 yuan throughout the year.It rose 5.6%.

　　Before 2021,foreign capital once sold Taiwan stocks in a big way.In addition,the dollar rebounded slightly in the international market,and the appreciation of the New Taiwan dollar stagnated slightly,but then the appreciation of the New Taiwan dollar continued to rise,continuing the strong upward trend of last year.It even fell below the price of 27 yuan in the intraday on January 5,2021,which opened a new era of appreciation of the exchange rate of the Taiwan dollar.

　　Market experts pointed out that"stable and moderately rising"is a more reasonable direction.The NTD is expected to fluctuate strongly,and the next key is to look at the trend of the US dollar.Next,if the U.S.government starts to tighten monetary policy and raise interest rates,it will put a lot of pressure on the NTD exchange rate.Before the Fed’s interest rate decision on November 3,the NTD may still have room to rebound.At that time,the Fed’s policy will directly affect the To the US dollar and New Taiwan dollar exchange rate trend.

　　The future exchange rate trend of Taiwan dollar and the US dollar

　　Determining the future exchange rate trends of the Taiwan dollar and the U.S.dollar mainly revolves around three points:the Fed's policy,foreign investment trends and the central bank's attitude.

　　Taking the financial crisis in 2008 as an example,since the implementation of the quantitative easing(QE)policy in the United States,not only did it directly lead to the depreciation of the dollar,but also the hot money spillover effect caused by the ultra-loose environment in the US market also pushed up the trend of other market currencies.Including Taiwan dollars.Later,the dollar gradually strengthened until the U.S.scaled back bond purchases and signaled interest rate hikes,which is exactly the same as the market environment this year.

　　In addition,the rise of the NTD has a strong logic.Based on the trend of recent years,the main reason for the strengthening of the NTD against the U.S.dollar is that in the second half of 2020,other major economies in the world have successively blocked the shutdown and the manufacturing industry has suffered serious setbacks,and Taiwan’s exports have suffered serious setbacks.Selling well,the surge in merchandise trade led to a widening of the current account surplus,which has since supported the sharp appreciation of the New Taiwan dollar exchange rate.Driven by exports,the PMI of Taiwan's manufacturing industry is also significantly higher than that of other major economies in the world.Whenever the manufacturing PMI outperforms the world,Taiwan stocks and Taiwan dollars will perform well,which is also a continuous attraction for Taiwan.The main internal factors for the return of business capital and the entry of foreign capital.

　　Regarding the trend of the Taiwan dollar in the later part of this year,experts from HSBC pointed out that the US bond yield rate has stagnated recently,and there is no sign of a rebound.Therefore,the international dollar index has also stopped at a low level below 91.Relatively conservative,mainly due to the stock exchange operation,there is not much demand for remittance of positions.However,the volume has been expanding in recent days.If the trend remains unchanged,the NTD will continue to rise.In addition,the export performance is outstanding,and exporters are waiting to enter the market with US dollar payments.Swan,I am afraid that the NTD will officially enter the new normal of 27 yuan.

　　At the same time,experts from Yuanta Baohua Research Institute of Comprehensive Economics said that due to the"Taiwan exceptionalism"of Taiwan's economy in the global market,the exchange rate of the New Taiwan dollar against the US dollar tends to strengthen accordingly;and vice versa.In addition,the NTD nominal effective exchange rate index has also been slightly higher than the mid-line value,reflecting that Taiwan's economic fundamentals are excellent,and the central bank has not actively adjusted the exchange rate,prompting the NTD exchange rate to strengthen.It is predicted that the exchange rate of NTD in the third and fourth quarters of this year will be 27.86 and 28.17 respectively;in 2022,the average exchange rate of the US dollar against the NTD will be 28.40,and the exchange rates in each quarter are predicted to be 28.20,28.30,28.50 and 28.60 respectively.