TAIPEI (Taiwan News) — The sudden appreciation of the Taiwan dollar by 8% over the past two days has hurt export-oriented industries such as semiconductors and machine tools and benefited importers such as the food industry.

Economists said the overall effect will be negative as Taiwan's economy remains export-oriented. The currency appreciation will be especially difficult for small businesses with poor risk-hedging capabilities, per PTS.

Bai Tsan-jung (白燦榮), chair of Sun Jen Textile Company, said, "Look at it this way, it may soon rise to NT$29. We are already making no profits, so don't talk to me about profits."

Wu Jin-rong (吳金榮), general manager of a local IT company, said, "All the money we receive is in US dollars, but domestic manufacturers' quotations are mainly in Taiwan dollars, which means your profit will be reduced by 8% to 9% due to the currency fluctuation."

The semiconductor industry is also under pressure. In the past, prices were quoted in US dollars, but now the same profit in US dollars will decline by nearly 10% due to the Taiwan dollar appreciation.

Export-oriented industries such as semiconductors, IT, and machine tools may suffer negative consequences due to foreign exchange volatility. The finance and life insurance industries are also suffering from currency exchange losses.

Association of Chain and Franchise Promotion Taiwan Director Wu Yung-chiang (吳永強) said, "The cost of imported goods has dropped, which has increased the profits of the entire business. But we also have to consider from the perspective of tourism whether the number of tourists entering Taiwan will decrease."

For example, appreciation of the Taiwan dollar will reduce the import cost of seafood and raw materials such as soybeans, wheat, and corn. The industries that may benefit include the service and catering industry, aviation, and tourism due to the overseas travel boom. Funds may also be diverted to assets and construction.

National Central University’s Department of Economics Professor Wu Dachrahn (吳大任) said, "60% to 70% of Taiwan's GDP is industries that have been severely impacted. If orders do not come in, they are unlikely to raise pay. In serious cases, you may even have to take unpaid leave, and there will be more risk of unemployment."

Chung-Hua Institution for Economic Research Vice President Wang Jiann-chyuan (王健全) said, "A 1% appreciation of the Taiwan dollar may affect the revenue of Taiwan's traditional industries by 0.1% to 0.3%. In addition, the depreciation of the US dollar and China's dumping may worsen traditional industries."

Economists also warned that large companies generally have tools to hedge currency risks, while smaller companies are less resilient. If the Taiwan dollar continues to appreciate, the outlook for the economic growth rate in 2025 may turn pessimistic.