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Currencies

Taiwan foreign currency reserves rise at fastest monthly pace

December increase hit $16.5bn despite central bank efforts to turn the tide

Taiwan's foreign currency reserves hit $529.911 billion last month, having increased by $51.785 billion in 2020.   © Reuters

TAIPEI (Reuters) -- Taiwan's foreign exchange reserves rose by $16.514 billion in December, the fastest monthly rise on record, the central bank said on Wednesday, adding it had needed to intervene in the forex market owing to the flood of foreign capital.

Taiwan's foreign currency reserves hit $529.911 billion in total last month, the central bank added. They had increased by $51.785 billion in 2020.

The Taiwan dollar is at a more than 23-year high against the U.S. dollar, unnerving the government, which is wary of being labeled a currency manipulator by Washington, Taiwan's most important international backer.

Last month, the U.S. Treasury added Taiwan to a "monitoring list" of countries whose currency practices have caused concern, the first time it has appeared on the list since 2017.

The central bank responded by saying Taiwan sees U.S. trade policies towards China as the reason its trade surplus with the United States has grown. It hopes to lower the surplus to address concern about the Taiwan dollar's exchange rate.

The currency's strength is also thanks in part to the island's strong exports of tech goods to support the work and study from home trend around the globe amid the COVID-19 pandemic.

Taiwan's exports in December are likely to have risen for the sixth consecutive month, according to a Reuters poll.

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