Taiwan central bank sold US$13 billion in forex intervention in 2022

TAIWAN’S central bank said on Friday (Feb 24) that last year it sold a net US$13 billion to intervene in the foreign exchange market to try and prop up the Taiwan dollar, compared with buying a net US$9.12 billion for all of 2021.

It is necessary to maintain the relative stability of the Taiwan dollar exchange rate, the central bank said in a report to lawmakers ahead of its governor taking questions in parliament next Wednesday.

The central bank, at its quarterly meeting in December, raised its policy rate by 12.5 basis points (bps) to 1.75 per cent and signalled an end to rate hikes in 2023 given inflation is coming under control.

The central bank reiterated that inflation this year would fall to about 2 per cent, in line with a forecast made Bank Governor Yang Chin-long forecast at the December meeting.

Taiwan’s January consumer price index rose 3.04 per cent year-on-year, exceeding market expectations for a 2.69 per cent rise.

With the island’s export-driven economy now slowing sharply, the central bank will have to consider at its next scheduled quarterly meeting in March whether to stand pat, or even to start cutting rates.

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Taiwan’s economy seen slowing in 2023 as global demand weakens

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The Taiwan dollar lost almost 10 per cent of its value against the greenback last year, but so far this year has strengthened around 1 per cent. REUTERS