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Taiwan Central Bank Confirms June Forex Intervention as Reserves Decline
Taiwan's central bank intervened in the foreign exchange market in June, conducting net sales of foreign currency that contributed to a decline in its reserves. The country's foreign exchange reserves stood at $597.15 billion at the end of the month, according to a statement from the monetary authority.
Details of the Intervention
The central bank cited several factors for the change in its June forex reserves, including its intervention activities, investment returns, and exchange rate fluctuations of other currencies against the U.S. dollar. Eugene Tsai, head of the bank's foreign exchange department, confirmed at a briefing in Taipei that the decline was partly due to the central bank's net selling during the month.
Tsai also noted that a significant depreciation of non-U.S. currencies relative to the dollar was a key factor. For context, the central bank's statement also revealed that its net foreign exchange sales in the first quarter of the year totaled $12.593 billion.
AdMarket Context and Outlook
The intervention came as the U.S. dollar strengthened following the Federal Open Market Committee’s (FOMC) June meeting, which the market interpreted as relatively hawkish, according to Tsai. This sentiment increased upward pressure on the dollar, prompting the central bank's actions to stabilize the market.
Looking ahead, Tsai suggested the U.S. Federal Reserve will likely hold interest rates steady in September, citing easing inflation and a moderating U.S. labor market. He added that if the dollar's strength subsides, market participants may become more willing to sell foreign currency, potentially reducing the need for further central bank intervention.