The dollar depreciation society: why Taiwan likes its currency weak

台湾经济的真相

Money Talks from The Economist

2025-11-14

33 分钟
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Taiwan's wildly-successful export economy has made it one of the wealthiest countries on earth. But, according to The Economist's Big Mac index, there's a secret sauce: it has perhaps the world's most undervalued currency. That makes the island's manufacturers more competitive abroad. But, at home, ordinary Taiwanese find themselves much worse off. So, Ethan travelled to Taipei to find out how the currency has stayed so weak for so long and what that means for Taiwan's relationship with America. Hosts: Ethan Wu, Mike Bird and Alice Fulwood. Transcripts of our podcasts are available via economist.com/podcasts. Listen to what matters most, from global politics and business to science and technology—subscribe to Economist Podcasts+.
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  • The Economist.

  • In the year 581, a group of Chinese migrants drifting far off the coast in their wooden junks,

  • came upon a lush, green island rising out of the South China Sea.

  • Once upon a time, Taiwan was just a sleepy little island, running on fishing and farming, sugar and rice. Not anymore.

  • Taiwan's high-tech boom is often compared to Silicon Valley,

  • where hefty IT salaries fuel economic growth,

  • but also push living costs to new heights, and widen the gap between the rich and poor.

  • Today, Taiwan dominates the business of advanced semiconductors, the chips that are fueling the AI boom,

  • and its stock market is the 10th largest in the world by market cap.

  • All this sounds like good news, until you examine just how heavily the island leans toward exports.

  • And that is becoming a problem.

  • US President Donald Trump's sweeping tariffs on dozens of countries took effect on Wednesday.

  • Taiwan was hit with a 20% tariff on most of its goods.

  • The island is currently facing multiple threats: from tariffs, from earthquakes, and of course, from Chinese aggression.

  • But there's another threat you don't hear so much about.

  • And it's part of the reason Taiwan has become such a successful exporter.

  • It's the currency.

  • So today, what is Taiwan's currency policy?

  • And how is it shaping the country?

  • You're listening to Money Talks from The Economist.