Taiwan Forwards Near Most Extreme in Decades Show US Dollar Pain

A Taiwan-dollar derivative that’s popular with the island’s largest life insurers is pointing to further gains for the currency, even after a surge of as much as 5% Monday to a three-year high.

The spread between the spot rate and one-year non-deliverable forwards on the Taiwan dollar-US dollar currency pair swelled to around 3,000 pips at one point on Monday, the widest level in at least two decades, according to data compiled by Bloomberg.

The divergence is the latest sign of seemingly insatiable demand for the Taiwan dollar driven by speculation the authorities will allow it to appreciate to help ...