Recently, the New Taiwan Dollar has surged dramatically, breaking the 1 NT$ mark during trading for two consecutive days, prompting reflections on the potential reenactment of the 'Plaza Accord' in Taiwan. Despite the head of the central bank, Yang Chin-long, assuring that the current conditions are different, the consequences of the Plaza Accord serve as a haunting reminder that such a path should not be treaded.

The Plaza Accord was signed on September 22, 1985, by finance ministers and central bank governors of five developed industrial nations— the United States, the United Kingdom, France, Japan, and Germany— aiming to gradually depreciate the dollar against the yen and deutsche mark through interventions in the foreign exchange market to address the 'U.S. trade deficit.' This approach led to significant economic consequences for Japan and other signatories.

Now, in 2025, with the Trump administration enacting a tariff war purportedly to resolve the 'huge U.S. trade deficit' alongside the recent surge of the Taiwan dollar, there are concerns about whether Taiwan is being forced down similar paths. The government has been criticized for its silence as the market trends downwards. On May 5th, President Lai Ching-te finally addressed concerns, affirming that several factors including foreign investment inflows significantly impact the exchange rate.

Facing pressure from tariffs and currency issues, Taiwan's industries, particularly those relying on exports such as machinery and textiles, are under severe strain. Without careful management, the outcomes for Taiwan's economy could be dire, leading to potential declines in investment, rising unemployment, and prolonged stagnation, akin to the so-called 'lost decades' we're eager to avoid.