US dollar declines on back of its Taiwanese counterpart strengthening

On Tuesday, the US dollar declines as its Taiwanese counterpart strengthens, highlighting the fragility of the greenback, Reuters reports. 

Taiwan's currency hit a three-year high of 29.59 per dollar on Monday after leaping 8% in two days. This coincided with the end of trade talks between the US and Taiwan, the news agency says. 

Head of research at Pepperstone Chris Weston notes that this dynamics is mostly driven by hedging activity from investors. However, countries with historically weak currencies may now be allowing them to strengthen as part of trade negotiations with the United States, the expert adds. 

Taiwan's central bank has repeatedly denied such a deal. Nevertheless, markets believe the Taiwan's dollar jump is approved by the regulator, and might as well be welcomed by the US. 

Additionally, strategist at Commonwealth Bank of Australia Carol Kong thinks investors remain unsure of the greenback’s reliability and are wary of putting money into the US currency.