U.S. dollar falls amid speculation over possible revalution of Taiwan counterpart By Investing.com

Investing.com - The fx678 Huitong websiteTaiwan dollar raced to its strongest level in almost three years on Monday, extending a multi-day run of gains, while the greenback weakened. 

The U.S. dollar had slid by 5.1% against its Taiwan counterpart to 29.162 by 08:10 ET (12:10 GMT). Meanwhile, a gauge of the U.S. dollar against a basket of its currency peers fell by 0.4% to 99.60.

Although the exact spark behind the jump in the Taiwan dollar remained unclear, Reuters reported that traders have said there have been no buyers for the U.S. dollars insurers and exporters are looking to sell.

Taiwanese officials have also been engaged in trade talks with their U.S. counterparts over avoiding the imposition of steep, “reciprocal” tariffs by Washington. 

Speculation has revolved around the U.S. possibly demanding a strengthening in some Asian currencies to improve its trade standing with regional economies.

Taiwan’s monetary authority usually intervenes in the event of outsized foreign exchange moves. But no such intervention was observed during the Taiwan dollar’s rally. 

However, an unnamed Taiwanese financial industry executive also told Reuters that they believed Taiwan’s central bank is allowing inflows into the country due to pressure from the U.S.

U.S. President Donald Trump announced in early April -- and then postponed by 90 days -- a slew of punishing tariffs on several countries, with Taiwan facing a 32% levy. Taiwan’s government revealed over the weekend that it had engaged in first-round talks with the U.S.

Sentiment towards Taiwan was also boosted by encouraging comments on eventual trade talks between the U.S. and China. Taiwan is heavily exposed to both countries through its exports, with China also being part of the supply chain for several major Taiwanese firms. 

In a television interview on Sunday, Trump said he believed China is keen to make a trade deal, although he did not lay out any specific timelines.

On Monday, investors will be eyeing a survey of services sector activity from the Institute for Supply Management, with a weaker-than-anticipated reading possibly suggesting more hurdles ahead for the U.S. economy. Last week, solid labor market data provided only limited support for the dollar.

The Federal Reserve is also due to unveil its latest monetary policy decision later this week. Markets are widely predicting that the Fed will leave interest rates unchanged, despite ongoing pressure from Trump to slash borrowing costs.

Trump said that while he has no plans to oust Fed Chair Jerome Powell, he described the central bank leader -- who the president claims has not moved fast enough to lower rates -- as a "stiff".

(Ambar Warrick and Reuters contributed reporting.)