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MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
TAIWAN
- The Taiwan central bank this morning confirm they have already intervened in currency markets in September, extending the run of intervention to three consecutive months.
- Confirmation comes alongside the FX reserves data released this morning (a drop to $545.5bln from $547.8bln), but the magnitude of the intervention is unlikely to unsettle investors given the USD appreciation so far this year.
Figure 1: FX intervention leaving little dent in overall reserves 
- Intervention so far this year looks relatively unsuccessful if the USD/TWD rate is used as a gauge (-10%), but the TWD rate is holding up far more effectively on a NEER basis.
Figure 2: TWD far healthier on a NEER basis vs. USD/TWD spot
- As such, the head of Taiwan CB's FX department has stated that it's hard to say whether intervention will continue for the rest of September, which makes the USD/TWD a less effective gauge for judging the bank's reaction function.
- Instead, net foreign investor selling of Taiwan stocks is a more likely trigger, with regulatory caps on insurers limiting the impact on FX via widening Taiwan-US rate differentials.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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