Taiwan's Central Bank Confirms June Forex Intervention as Reserves Decline

Taiwan's central bank intervened in the foreign exchange market in June, contributing to a decline in the nation's foreign reserves, the monetary authority confirmed in a statement. The country's closely watched reserves fell to $597.15 billion at the end of June.

Intervention Amid Dollar Strength

The central bank attributed the change in its reserves to a combination of factors, including investment returns, currency exchange rate fluctuations, and direct intervention activities. Eugene Tsai, head of the bank's foreign exchange department, clarified that the decline was primarily the result of net selling of foreign currency by the bank and a significant depreciation of non-U.S. currencies against the dollar.

At a briefing in Taipei, Tsai noted that the market's perception of the U.S. Federal Open Market Committee's June meeting as "relatively hawkish" fueled the dollar's strength. This, in turn, influenced currency selling prices and prompted the central bank's actions to stabilize the market.

Outlook on Fed Policy

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Looking ahead, Tsai suggested that the Federal Reserve will likely keep interest rates unchanged at its September meeting. He cited easing U.S. inflation and a "relatively mild" labor market as key reasons for this outlook.

An easing in the U.S. dollar's strength could alter market dynamics, Tsai added. He suggested that if the dollar moderates, market participants may become more willing to sell foreign currency.

Context of 2026 Interventions

The June intervention is part of a broader trend for the central bank this year. According to its statement, the bank's net foreign exchange sales in the first quarter of the year totaled $12.593 billion.