Taiwan central bank says foreign exchange measures enough to maintain market stability

Taiwan's central bank said on Wednesday it will not adopt foreign exchange control measures and foreign exchange management measures are enough to maintain financial market stability.

The Taiwan dollar has depreciated sharply in recent weeks due to aggressive interest rate hikes in the United States and the U.S. dollar strength as well as worries over slowing global economic growth.

It has lost 13 per cent against the dollar so far this year, though the currencies of two other major competitors, Japan and South Korea, have weakened even more.

The foreign exchange market was running smoothly and was still stable, despite the fact that foreign capital was out of the stock market against the backdrop of U.S. rate rises and global market falls.

Taiwan has never implemented foreign exchange controls and foreign exchange management measures are sufficient to maintain financial market stability, it added.

If a U.S. rate hike causes a large outflow of foreign capital, the bank said it has sufficient capacity to respond to fluctuations in the foreign exchange market.

It added that the bank will not adopt foreign exchange control measures.

The bank said that it would make a statement after comments by its governor Yang Chin-long in parliament were misreported when he was responding to theoretical questions on tensions with China or large U.S. rate rises that cause a large and sudden outflow of foreign capital.

In its statement, the bank noted Taiwan's large foreign exchange reserves, sound balance of payments, trade surplus and very low foreign debt levels.

During previous international financial crises, for example in 1997 and 2008, the bank said it adopted flexible and effective monetary policies and foreign exchange management measures in order to stabilise the market and to allow Taiwan to get through the crises safely and quickly.