Calls For CBC To Change FX Regime

The Taiwanese dollar has declined again, consolidating above 28.50 – the rate last at 28.63 and hitting the highest since December. TWD has been pressured by foreign equity sales, so far this week there has been $2.25bn worth of sales of Taiwan equities by foreign funds.

• Elsewhere, Taiwan central bank insiders have said the CBC's currency policy needs to be changed. Three current and former members of Taiwan's central bank board, Board members Li Yi-ting and Chen Shiu-sheng, and ex-member Wu Tsong-min, are calling for an overhaul of its currency policy, saying efforts to tamp down on the local dollar's appreciation is increasingly having a negative effect on the economy. The bank has amassed large USD reserves defending the 28.00 handle in USD/TWD.
• According to the central bank's exchange-rate policy, any move which puts the currency at least 5% from the nominal effective exchange rate's 36-month moving average means the TWD is outside a stable range.
• Elsewhere, Taiwan and US have strengthened relations, forming an MOU on coast guard cooperation while US President Biden said that he will hold China accountable for its actions on Taiwan.