Taiwan central bank sold net $880 million to intervene in forex market in H1

TAIPEI :Taiwan’s central bank said on Tuesday it sold a net $880 million to intervene in the forex market in the first half of this year, stepping in to maintain smooth market operations as the island contends with soft economic growth.

Taiwan’s central bank last year sold a net $13 billion in the foreign exchange market in an effort to bolster the Taiwan dollar, a sharp reversal after buying a net $9.12 billion in 2021.

The Taiwan dollar has lost about 5 per cent of its value against the greenback so far this year.

The central bank last month flagged continued tight monetary policy as it keeps a close eye on inflation, and trimmed its 2023 growth forecast for the export-reliant economy. It also keep its benchmark interest rate unchanged.

In a report to parliament ahead of governor Yang Chin-long taking lawmaker questions on Wednesday, the bank also said it anticipates the island’s economic growth to pick up in the second half of 2023 while inflation pressure could trend lower into next year.

Taiwan is a major producer of semiconductors used in everything from cars to smartphones and sluggish global demand has affected its many tech manufacturers.

With global demand hit by high inflation, rising interest rates and the impact of the Ukraine war, Taiwan’s economy slipped into recession in the first quarter before returning to slight growth in the April-June quarter.

Last month, at its quarterly rate-setting meeting, Taiwan’s central bank again cut its 2023 estimate for economic growth to 1.46 per cent from a forecast of 1.72 per cent in June, but predicted a rebound in 2024 with growth of 3.08 per cent.

It also trimmed its headline consumer price index (CPI) forecast for this year to 2.22 per cent from a previous prediction of 2.24 per cent, but said it saw it falling to below 2 per cent next year.