What Is New Taiwan Dollar (TWD)?
The New Taiwan dollar (TWD) is the official currency of Taiwan and is issued by the Central Bank of the Republic of China (Taiwan), the nation's central bank.
Key Takeaways
- The New Taiwan dollar (TWD) has been the currency used in Taiwan since 1949.
- New Taiwan dollar (TWD) only became a "national" currency in 2000, when the Central Bank of the Republic of China (Taiwan) took over its issuance from the Bank of Taiwan.
- NT$ is the internationally recognized symbol for the Taiwan dollar, and TWD is its ISO currency code.
Understanding New Taiwan Dollar (TWD)
The New Taiwan dollar'sISO currency code and abbreviation is TWD. It is sometimes abbreviated as NT$ or NT before printed dollar amounts. In Mandarin, prices are often quoted in yuan, although conversationally kuai is often used. Although the New Taiwan dollar can technically be subdivided, practically everything sold in Taiwan is quoted in whole dollars. At present rates, NT$1 is equal to about 3.5 US cents.
TWD is available in banknote denominations of NT$100, NT$500, and NT$1,000. There are also NT$200 and NT$2,000 notes, though they are seldom used. Coins in circulation include NT$1, NT$5, NT$10, and NT$50 pieces, along with a NT$20 piece that is not commonly used.
Though most people know the country simply as Taiwan, its official name is the Republic of China, which was established in China in 1912. Therefore, Taiwan's central bank is called the Central Bank of the Republic of China (Taiwan).
This shouldn't be confused with the People's Bank of China, which is the central bank for the People's Republic of China. Though the Communist Party in China has never governed Taiwan, it claims the island as a province.
The first currencies used in Taiwan were Dutch and Spanish silver coins brought to the island by traders in the 1600s. After Taiwan came under the administration of the Qing Dynasty beginning in 1662, Chinese silver taels circulated alongside foreign silver. Copper coins issued by the Kingdom of Tungning also circulated in Taiwan.
Between 1895 to 1945, Taiwan fell under the control of Japan. The Bank of Taiwan was established in 1899 and given the responsibility of issuing silver and gold certificates that could be exchanged for coins.
As of Q2 2021, one U.S. dollar bought 28.38 New Taiwan dollars. In 1992, one USD bought 24 New Taiwan dollars, but this weakened to NT$34 by 1998. The currency has traded in a wide range of NT$28~NT$35 per USD over the past two decades.
Old Taiwan Dollar (1946 to 1949)
Japan surrendered the island at the end of World War II. The Republic of China, led by Chiang Kai-shek and the Nationalist party, then took control of Taiwan. On May 20, 1946, the Bank of Taiwan began issuing the Taiwan dollar (which later became known as the Old Taiwan dollar). It introduced $1 and $500 notes featuring the portrait of Dr. Sun Yat-sen, considered the founder of modern China. Due to hyperinflation, a $10,000 note was introduced in 1948, followed by promissory notes with a face value as high as $1 million in 1949.
The hyperinflation was caused by the civil war between the Nationalist party and communist forces, which had resumed their hostilities upon the conclusion of World War II. Chiang Kai-shek fled to Taiwan with the Republic of China government in 1949, leaving the communist party to establish the People's Republic of China.
On June 15, 1949, the provincial government in Taiwan replaced the Old Taiwan dollar with the New Taiwan Dollar at an exchange rate of 40,000 to 1. The Central Bank of the Republic of China resumed operations in 1961. However, the Bank of Taiwan continued to issue the currency under its auspices. At first, the New Taiwan dollar was only used in Taiwan, but later became the medium of exchange in other areas still controlled by Republic of China; i.e., the outer lying islands of Kinmen, Matsu, and Dachen.
However, the New Taiwan dollar was not the national currency of the Republic of China, now a government in exile. The job of issuing the national currency still belonged to the Central Bank of China (first established in Guangzhou, China, in 1924). The silver dollar was legally (though not in practice) the national currency in the Republic of China until 1992. The New Taiwan dollar, on the other hand, had been viewed as a provincial currency—and not a national one—largely because Chiang thought his Nationalist party would one day retake the mainland.
Between 1992 and part of 2000, the Republic of China had no "official" currency. On July 1, 2000, the Central Bank of the Republic of China (Taiwan)replaced the Bank of Taiwan as the issuer of the New Taiwan dollar. Thus, the New Taiwan dollar was elevated from a provincial to a national currency.
Because the TWD has been in circulation since 1949, it is usually just called the Taiwan dollar. The "new" is not required and is meant only to differentiate it from the old currency.
USD/TWD Example
Assume a traveler is headed to Taiwan and wants to do some exchange rate research before they get there. They look at a USD/TWD quote and see the current rate is 28.4, which means it costs NT$28.4 to buy $1. Exchanging $1,000 in USD would provide the traveler with $28,400 in spending money.
However, the banks and currency exchange merchants are unlikely to provide that rate as they want to make some money on the exchange as well. Assuming the bank takes a fee of 3%, the likely quoted rate for buying TWD with USD would be around 27.54, which would give the traveler $27,540 in spending money.
