TAIPEI (Taiwan News) — Taiwan’s currency has recently become a proxy indicator for new market risks in Asia amid Russia’s invasion of Ukraine.

Forex traders are bearish about the New Taiwan dollar (NTD) based on speculation that Moscow’s aggression could open the door to Beijing ramping up tensions on Taipei, per a Bloomberg report. The currency, which was performing poorly last month, is trading higher against the U.S. dollar.

With the outbreak of war in Ukraine on Feb. 24, the NTD jumped to 28.08 against the U.S. dollar, a new high for 2022. After correcting the following day, it has slowly climbed back above the 28 mark since Monday (March 1).

The USD-NTD exchange rate’s one-month risk reversals grew to 1.1525% on Tuesday (March 2). Not since May 2020 has investor sentiment been so bullish toward the U.S. dollar.

Yet Premier Su Tseng-chang (蘇貞昌) told Taiwan’s Legislative Yuan the Bank of Taiwan has sufficient U.S. dollar reserves to keep the NTD stable. Indeed, anonymous sources told Bloomberg that Taiwan’s state banks sold off greenbacks to make up for losses against the local currency before the end of trading Tuesday.