The central bank yesterday said it bought US$13 billion more US dollars than it sold in the first half of the year to prevent the New Taiwan dollar from appreciating too much.
In a report submitted to the Legislative Yuan, the central bank said it bought US$13.25 billion more of the greenback than it sold from January to June to stabilize the exchange rate with the NT dollar and smooth volatility on the local foreign exchange market.
The report came out before central bank Governor Yang Chin-long (楊金龍) attended a hearing of the Legislative Yuan’s Finance Committee tomorrow.
Photo: CNA
In the six-month period, the US dollar fell 9.63 percent against the NT dollar after worries rose over uncertainties related to the policies of US President Donald Trump after he took office in January. As a result, the US dollar index, which tracks the greenback against the currencies of Washington’s six major trading partners, fell by 10.70 percent, the central bank said.
The US dollar’s weakness also reflected large funds moved by foreign institutional investors into the local market, which boosted the US dollar supply, it said.
The losses suffered by the US dollar appeared more apparent in May, when the central bank rushed to buy the greenback to cap the NT dollar’s appreciation, with the purchases boosting Taiwan’s foreign exchange reserves by about US$10.12 billion, the fifth-largest monthly increase in history.
The central bank previously said that the large purchase was intended to slow down the US dollar’s weakness in May.
Market watchers said that without the central bank’s intervention, the US dollar would have fallen further.
However, the central bank said it has adopted a two-way market intervention strategy, indicating that if the US dollar rises sharply, it would sell greenbacks to prevent the NT dollar from falling too much.
The central bank said that as of Tuesday, the US dollar had fallen 6.95 percent this year against the NT dollar, with foreign institutional investors tending to make net purchases on the local stock market.
It added that the stronger NT dollar reflects the sound economic fundamentals of the country.
The NT dollar’s fluctuations were still smaller than those of other major currencies such as the euro, the yen and the won, it said.
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