Standard Chartered Bank: Elevated TWD NEER to weigh on the TWD

Quotes from Standard Chartered Bank

• The Taiwan dollar (TWD) has been the strongest performer against the US dollar (USD) in Northeast Asia YTD, appreciating by 0.68%. It has benefited from strong equity inflows, with over USD 5.7bn of foreign buying, and underlying economic activity.
  
  
• Lower oil prices have benefited Taiwan's external position and also supported the currency. However, we expect FX policy to play a larger role in the TWD outlook. 
  
  
• The TWD's outperformance has led to the TWD nominal effective exchange rate (NEER) reaching multi-year highs. 
  
  
• We expect greater intolerance of TWD appreciation, especially on the back of a rebound in the USD ahead of nonfarm payroll data releases and as we expect USD-JPY to see a sustained break above 120. We maintain a short-term Underweight FX weighting on the TWD.