The central bank on Thursday acknowledged in the clearest terms to date that it is intervening in foreign-exchange markets, using the word that it had studiously avoided and vehemently protested until now.
Regular late-session moves by state-backed banks to pare gains by the New Taiwan dollar against the US dollar are “a kind of intervention,” central bank Governor Yang Chin-long (楊金龍) told reporters after announcing its decision to maintain record-low interest rates.
He used the English word “intervention” in his otherwise all-Mandarin response to a reporter’s question. Previously, Yang had referred to such actions as “smoothing.”
Photo: CNA
Daily efforts to stabilize the NT dollar began in earnest in June last year, holding at about NT$29.50 against the US dollar until September last year.
Since then, it appears that the bank has been managing the currency’s appreciation, with intraday trading crossing the NT$28 line during most sessions this year, before retreating at close.
Trading has been more erratic in the past two weeks — the currency weakened to NT$28.47 to the greenback at 11:56am yesterday, after closing at NT$28.31 on Thursday.
Since taking the reins as governor in early 2018, Yang has gradually brought a more relaxed and candid tone to the monetary authority’s news conferences.
In March last year, the central bank started releasing more information on its foreign-exchange swap trading, a rare move aimed at answering calls for greater transparency.
His remarks came after the US Department of the Treasury in December last year added Taiwan to its currency manipulator watch list.
Last week, Yang said that the US might designate Taiwan a currency manipulator, but that there would not be much negative impact on the local economy, given robust US demand for semiconductors.
Semiconductors were the main factor driving Taiwan’s trade surplus with the US, he said.
“If they want to reduce our trade surplus with them, then we could just stop selling them our chips,” he joked to lawmakers on Thursday last week. “But they need them.”
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