Regional currencies climb as US-China negotiations revive investor sentiment; Taiwan dollar leads historic rally

The Singapore dollar climbed to 1.292 per US dollar on May 5, its strongest level since September 2024, as optimism over US-China trade negotiations triggered a broad rally in Asian currencies.

On May 5, hopes of a de-escalation in US-China trade tensions and potential tariff agreements spurred gains across Asian currency markets. The Singapore dollar rose 0.6% to 1.292, bringing its 2025 appreciation to 5.3%. This marks the currency’s strongest close since September 2024, according to Bloomberg data.

Taiwan’s currency experienced an exceptional 5% intraday gain, the largest in over three decades, as exporters rushed to convert US dollar holdings amid trade optimism. The Taiwan dollar has strengthened over 10% in the past month alone.

Currency Shifts Driven by Policy Signals

The rally follows US President Donald Trump’s comments suggesting that trade deals could be announced as early as this week. Trump’s aides are reportedly in active communication with Chinese counterparts. Analysts see this as a signal that the trade war phase may be giving way to one of negotiation and resolution.

“This looks like the de-escalation phase,” said Joey Chew, Head of Asia FX Research at HSBC, adding that the current movement is driven more by hedging flows than long-term asset reallocation.

Taiwan’s Central Bank Under Spotlight

The Taiwan dollar’s rapid ascent also triggered speculation that currency appreciation could be part of the strategy to secure trade concessions from the US. While the central bank was the only major buyer, it did not intervene strongly on May 5, fueling market chatter.

Despite this, the central bank issued a statement denying any US pressure to appreciate the currency, saying it remained committed to maintaining the dollar’s “dynamic stability.”

Other Asian Currencies Join the Rally

The Malaysian ringgit and South Korean won both appreciated by 1.3%, with the Japanese yen and Australian dollar gaining 0.6% and 0.5%, respectively.

Amid speculative pressure, Taipei’s trading volume for US dollar–Taiwan dollar pairs hit levels not seen since the 2008 financial crisis. Major institutions such as Cathay United Bank had to introduce virtual queues to manage digital traffic.

US Dollar Faces Growing Bear Sentiment

Despite stronger-than-expected US jobs data on May 2, bearish sentiment toward the greenback is growing. Morgan Stanley analysts projected continued dollar weakness, citing a steepening US yield curve and increased hedging of American investments.

Elsewhere, the Hong Kong Monetary Authority made a record intervention to defend its currency peg, as other territories also prepare for potential capital inflows.

The Singapore dollar’s climb to 1.292, alongside broad Asian currency gains, signals a shift in investor sentiment amid evolving trade dynamics. As negotiations between the US and China show signs of renewal, Southeast Asia’s financial markets—particularly in export-driven economies—are positioning for volatility, opportunities, and renewed momentum in 2025.

Sources: The Straits Times (2025), British Chamber of Commerce Singapore (2025)

Keywords: Singapore Dollar Rally, US China Trade, Asian Currency Gains, Taiwan Market Moves, Forex News