Taiwan's Central Bank: Ready to Shield the Taiwan Dollar from Market Volatility

Amidst Global Economic Uncertainty, Authorities Affirm Commitment to Currency Stability.

Taipei, Taiwan - Facing ongoing volatility in global financial markets, Taiwan's central bank has affirmed its readiness to intervene and stabilize the Taiwan dollar. The announcement comes in response to recent developments, including the implementation of tariffs by the United States, which have contributed to market uncertainty.

At a regular press briefing, Tsai Chiung-min (蔡炯民), head of the central bank's Foreign Exchange Department, stated that plans to stabilize the currency are "locked and loaded" and prepared for immediate action. The bank has established several measures designed to mitigate significant fluctuations.

These measures include a swift notification system for substantial foreign exchange transactions, strategies to maintain foreign currency liquidity, and a proactive approach to market intervention should an imbalance between supply and demand lead to excessive swings in the Taiwan dollar's exchange rate, according to Tsai.

Despite initial concerns of a sharp decline, the Taiwan dollar demonstrated resilience on Monday, managing to recoup early losses and even show a slight gain against the U.S. dollar, Tsai reported.

The central bank's comments were made after the scheduled release of its foreign exchange reserves data for the end of March. The data predates the U.S. tariffs announced on April 2nd.

As of the end of March, Taiwan held US$578.022 billion in foreign exchange reserves, an increase of US$438 million from the previous month. However, the Taiwan dollar depreciated against the U.S. dollar during March, declining by NT$0.362, or 1.09 percent, moving from approximately NT$32.8 to over NT$33, as per the bank's data.

During the briefing, Tsai also addressed comments from an economist at Academia Sinica, who advocated for a stronger Taiwan dollar to address Taiwan's trade deficit with the U.S. Tsai responded by saying that the Taiwan dollar's value is largely driven by market dynamics and that the central bank intervenes only during periods of significant exchange rate fluctuations or major supply-demand imbalances.

Tsai highlighted that since 2010, the Taiwan dollar has experienced a 19.4 percent appreciation, as measured by its nominal effective exchange rate (NEER).