Taipei: Taiwan's central bank announced on Monday its readiness to stabilize the Taiwan dollar if necessary, amidst ongoing global financial market volatility following the United States' recent imposition of sweeping tariffs.
According to Focus Taiwan, during a regular press briefing, Tsai Chiung-min, the head of the central bank's Foreign Exchange Department, stated that the bank is prepared with strategies to stabilize the currency, describing the plans as "locked and loaded." These strategies include an immediate notification system for large foreign exchange settlements, ensuring foreign currency liquidity, and potential market intervention to address any significant supply-demand imbalances that could cause excessive fluctuations in the Taiwan dollar's exchange rate.
Despite concerns of a sharp depreciation of the Taiwan dollar against the U.S. dollar on Monday, the currency managed to stabilize, reversing early losses to experience a slight gain, Tsai noted. His comments followed the central bank's scheduled announcement regarding its foreign exchange reserves as of the end of March, prior to the U.S. tariffs announcement on April 2. The data revealed Taiwan's forex reserves stood at US$578.022 billion at the end of March, marking an increase of US$438 million from the previous month.
The Taiwan dollar experienced a depreciation against the U.S. dollar during March, dropping NT$0.362, or 1.09 percent, moving from around NT$32.8 to above NT$33, according to the bank. During the press briefing, Tsai was also asked to comment on suggestions from an Academia Sinica economist who advocated for allowing the Taiwan dollar to appreciate as a means for Taiwan to reduce its trade deficit with the U.S. Tsai responded that the value of the Taiwan dollar would be determined by market dynamics, with central bank intervention reserved for instances of excessive exchange rate volatility or significant supply-demand imbalances.
Since 2010, the Taiwan dollar has appreciated by 19.4 percent, as measured by its nominal effective exchange rate (NEER), Tsai added.