TWD: Maintaining Our Bullish Stance

Despite heightened risk aversion over the past month, we note that the Taiwanese dollar (TWD) has held its key resistance-turned-support level of TWD29.95/US$. Moreover, while Taiwanese equities experienced a substantial sell-off following Japan's devastating disasters, the currency remained relatively stable, proving its resilience. The TWD remains fundamentally attractive given its relative undervaluation and the Taiwanese economy's healthy current account prospects, and we see scope for currency gains. Although intervention tactics could cap currency strength, we expect the broad appreciatory trend channel to remain intact.

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