Taiwan Seeks To Dampen Property Market As Central Bank Faces FX Intervention Questions

Headlines hitting the wires that Taiwan proposes measures to curb housing market speculation, this has been discussed over the past few weeks and flagged for announcement in the past 48 hours.

• Taiwan's real-estate market has been on an uptrend since the initial downturn from the impact of the COVID-19 pandemic, thanks to the nation's effective control of the outbreak, a low interest rate environment and high market liquidity. The central bank met with major mortgage operators twice in November to warn against looser standards of property market lending that could fuel real estate price hikes and threaten the stability of the financial system.
• The Taiwan Central Bank has been asked to explain currency intervention by The Control Yuan, a government supervisory agency in Taiwan.
• The bank reported in October it bought $3.9bn U.S. dollars in the first half of 2020, more than half what it spent throughout 2019, to intervene in the foreign exchange market to help tame a strong local currency.
• The bank has been worried about the strong TWD, which has gained over 5% against the greenback so far this year, making the island's exports more expensive and feeding concern in Taipei that Washington may label it a currency manipulator.
• The bank is now attempting to defend 28.5 in USD/TWD, the local currency hasn't closed stronger than that since October 1997, prior to the tenure of former central bank governor Perng Fai-nan.