TAIPEI (Reuters) – The exchange rate of the Taiwan dollar against the US dollar has remained stable this year without significant fluctuations, Taiwan’s central bank said on Tuesday, adding that it had intervened in the market this year but at a lower rate. modest than last year.
The strength of the currency has been a concern not only because it makes the economy’s trade-dependent exports more expensive, but also because in December the US Treasury added Taiwan to a “watch list” of countries whose monetary practices have raised concerns.
In a report to parliament before Governor Yang Chin-long answered questions from lawmakers on Thursday, the central bank said that in the first half of this year, it bought $ 8.73 billion net to intervene and “avoid serious disturbances “in the currency market.
For comparison, the central bank bought $ 39.1 billion net for 2020 as a whole.
He said the Taiwan dollar has so far appreciated about 2.8% since the end of last year, which was “stable against the exchange rates of other currencies.”
Taiwan’s managed floating exchange rate system has served it well, with the currency fluctuating less than the Singapore dollar, the euro, the yen or the South Korean won, good for both Taiwanese exporters, the financial stability and economic growth, added the bank.
Taiwan is a small, open economy with a high dependence on trade, so it is necessary to maintain the “relative stability” of the currency, the bank said. Last week, the central bank revised upward Taiwan’s economic growth outlook for the year.
Reporting by Liang-sa Loh and Ben Blanchard; Editing by Simon Cameron-Moore