Recent U.S. economic data has presented a mixed picture. While the ADP private sector employment report exceeded expectations with 42,000 job gains, October layoffs also reached their highest level in 20 years. Markets have renewed their bets on a Federal Reserve rate cut in December, pushing the dollar index below 100. Lee-Rong Wang, a consultant at the Chung-Hua Institution for Economic Research (CIER), notes that three major structural pressures are influencing the trajectory of the U.S. dollar.
First, the U.S. national debt has surpassed US$37 trillion, representing approximately 1.27 times the country’s nominal GDP. The deteriorating fiscal deficit, coupled with the risk of government shutdowns, is eroding market confidence and diminishing the appeal of the U.S. dollar. Second, America’s persistently large trade deficit shows little sign of improvement. Taiwan has become the United States’ sixth-largest source of trade deficit, at approximately US$73.9 billion, which conversely supports the medium- to long-term outlook of the Taiwan dollar. Third, the Trump administration’s continuation of tariff policies on multiple countries, despite some relaxation following recent talks between Trump and Xi, continues to pressure global trade and U.S. inflation while accelerating the “de-dollarization” process.
Taiwan Dollar Supported by Fundamentals Amid Short-Term Foreign Capital Adjustments
Recent concerns about an AI bubble have triggered a sharp selloff in U.S. technology stocks, with Taiwan Semiconductor Manufacturing Company’s American Depositary Receipts falling more than 3 percent. Short-term foreign capital outflows have pushed the Taiwan dollar below NT$31, marking a 6-month low. While the Taiwan dollar faces near-term weakness from international capital volatility, its fundamentals remain solid. With robust export performance and continued strong demand for AI and semiconductors, annual economic growth is expected to exceed 5%, leaving the Taiwan dollar with significant appreciation potential over the medium to long term.
Consultant Lee-Rong Wang emphasizes that while the U.S. dollar may receive short-term support from safe-haven demand, its capacity for sustained strength remains limited unless the structural fiscal and trade imbalances are resolved. The Taiwan dollar is positioned to gradually recover amid market fluctuations.
Author: CIER Editorial Team
Date: November 11, 2025