The Taiwan dollar is trading at its best level in nearly a decade as policymakers permit the currency to appreciate. The central bank is reportedly loosening its grip on the Taiwan dollar, alluding to strong economic growth and a boom in manufacturing exports. Some market analysts believe that the government might be letting the currency trend higher to appease the US administration after receiving more than $4 billion in military aid.

For the last year, the central bank has intervened daily into foreign exchange markets to limit the dollar’s appreciation. Lately, however, officials have adopted more of a hands-off approach, signaling that it will allow the currency to strength to its best level in a decade. The last time it breached 29 against the US dollar was in 2011.

Year-to-date, the Taiwan dollar has gained more than 4% against the greenback amid a flurry of developments bullish for the East Asian currency. The country is projected to report 2% growth in its third-quarter gross domestic product (GDP), up from the 0.58% drop in the second quarter.

Some are speculating that the Taiwanese government wants to appease Washington by not intervening in foreign exchange markets too much, especially after receiving $2.4 billion worth of 100 Harpoon Coastal Defense Systems anti-ship missiles and $1.8 billion worth of extended-range land-attack mobile missiles, as well as surveillance and reconnaissance sensors. Plus, with the US ostensibly making an anti-China hedge in Taiwan, leaders want to be in good standing with the White House.

With the US Treasury Department set to release its semi-annual report on currency manipulators, Taipei may not want to threaten its positive relationship with the Americans.

Wang Ting-Yu, a Taiwanese lawmaker in the ruling party who co-chairs the island’s Foreign Affairs and National Defense Committee, told Bloomberg Television China might think twice before engaging in conflict with its regional neighbor:

This arms sale is quite important and crucial to Taiwan. We need to defend ourselves, so when we develop our capability we try to be hedgehog-like. When a lion tries to swallow a hedgehog, it will hurt – so no lion will try to swallow a hedgehog.

Chinese President Xi Jinping released a statement following the news, confirming that it “will take necessary measures to uphold our sovereignty and security interests.”

The USD/TWD currency pair dipped 0.09% to 28.5873, from an opening of 28.6132, at 19:54 GMT on Tuesday. The EUR/TWD slipped 0.09% to 33.7570, from an opening of 33.7910.