Taiwan's Central Bank Intervened in Forex Market in June, Reserves Decline

Taiwan’s central bank announced it intervened in the foreign exchange market in June, a move that contributed to a drop in the nation's reserves. According to a statement from the monetary authority, foreign exchange reserves fell to $597.15 billion by the end of the month. The bank cited a combination of factors, including investment gains, intervention activities, and exchange rate fluctuations against the U.S. dollar, for the change in reserve levels.

Eugene Tsai, head of the central bank’s foreign exchange department, elaborated on the decline during a briefing in Taipei. He attributed the drop to the central bank's net selling of foreign currency in June and a significant depreciation of non-U.S. currencies. For the first quarter of the year, the central bank's net foreign exchange sales totaled $12.593 billion.

Tsai noted that market perception of the U.S. Federal Open Market Committee’s June meeting as relatively "hawkish" strengthened the dollar. This, in turn, affected foreign exchange selling prices in the market and prompted the central bank's actions.

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Looking ahead, Tsai suggested that the U.S. Federal Reserve will likely hold interest rates steady in September, pointing to easing inflation and a moderating U.S. labor market. He added that if the U.S. dollar's strength eases, market participants may become more willing to sell foreign currency.