New Taiwan Dollar

The Taiwanese dollar has been the currency of Taiwan since 1949, when it replaced the Old Taiwan dollar. Its ISO 4217 code is TWD and it is divided into 100 cents. Informally, it is also sometimes referred to as the "yuan". The Taiwanese dollar is issued by the Central Bank of the Republic of China (Taiwan). The Taiwanese dollar is the 8th most traded currency in the world. It is also one of the few currencies that is not pegged to the US dollar, instead following a managed float regime. The Taiwanese dollar is seen as a stable currency and has been one of the best performing currencies in Asia in recent years. The history of the Taiwanese dollar can be traced back to the early days of Taiwanese settlement, when the island was known as Formosa. At this time, the Spanish silver dollar was the primary currency in use. However, due to the high cost of transportation, the silver dollars were often only used for large transactions, with smaller transactions being conducted using copper cash. In 1841, the Qing Dynasty of China annexed Taiwan and began to issue its own currency, the Taiwan copper cash. However, due to the low value of copper, this currency was soon replaced by the silver dollar. When the Japanese took control of Taiwan in 1895, they introduced the Japanese yen as the official currency. However, due to the high value of the yen, the Taiwanese people continued to use the silver dollar for everyday transactions. After the end of World War II, Taiwan was returned to Chinese control. In 1949, the Nationalists introduced the New Taiwan dollar as the official currency of the island. The new currency was pegged to the US dollar at a rate of NT$30 to US$1. However, due to the outbreak of the Korean War, the US dollar began to appreciate against other currencies, causing the Taiwanese dollar to become overvalued. In order to correct this, the peg was changed to NT$40 to US$1 in 1951. This peg remained in place until 1967, when it was changed to NT$60 to US$1. This new peg lasted until the early 1970s, when the US dollar began to appreciate against other currencies once again. In order to keep the Taiwanese dollar from becoming overvalued, the Central Bank of Taiwan began to intervention in the foreign exchange market. This intervention caused the Taiwanese dollar to appreciate against the US dollar, reaching a high of NT$29.50 to US$1 in February 1973. However, due to the oil crisis of 1973, the US dollar began to appreciate against other currencies once again. In order to keep the Taiwanese dollar from becoming overvalued, the Central Bank of Taiwan began to sell US dollars and buy Taiwanese dollars. This intervention caused the Taiwanese dollar to depreciate against the US dollar, reaching a low of NT$21 to US$1 in December 1974. In order to stabilize the Taiwanese dollar, the Central Bank of Taiwan pegged the Taiwanese dollar to the US dollar at a rate of NT$22.50 to US$1 in February 1975. This peg remained in place until July 21, 1997, when the Central Bank of Taiwan allowed the Taiwanese dollar to float against the US dollar. Since the Central Bank of Taiwan began to intervention in the foreign exchange market, the Taiwanese dollar has been one of the most stable currencies in Asia. The Central Bank of Taiwan has continued to intervene in the foreign exchange market in order to keep the Taiwanese dollar from becoming overvalued. In 2015, the Central Bank of Taiwan spent over US$4 billion in order to keep the Taiwanese dollar from appreciate against the US dollar. The Taiwanese dollar is seen as a stable currency and is one of the best performing currencies in Asia.