Central bank urges commentators not to speculate on NT dollar strength

Taipei, May 5 (CNA) The Central Bank of the Republic of China (Taiwan) on Monday urged market commentators to avoid excessive speculation about a continued sharp appreciation of the Taiwan dollar against the U.S. dollar, warning that such behavior disrupts market order.

In a statement, the central bank said these comments have created expectations that the Taiwan dollar will keep strengthening. It also called on Taiwanese enterprises to remain rational and not rush to sell off U.S. dollars in response to speculation, emphasizing the need to protect their own long-term interests.

The statement came after the U.S. dollar fell NT$0.919 on Monday to close at NT$30.145, after shedding NT$0.953 to end at NT$30.064 Friday. In two sessions, the greenback has dropped 6.21 percent against the Taiwan dollar.

Local news media recently reported that market analysts attribute the U.S. dollar's sharp losses to pressure from the Trump administration, as Taiwan and the United States have entered talks over a potential reduction of the 32 percent reciprocal tariff imposed by the White House on April 2, which was suspended 90 days later.

The reports cited the so-called "Mar-a-Lago Accord" under U.S. President Donald Trump, claiming the U.S. has sought removal or lowering of reciprocal tariffs and currency appreciation in negotiations with trading partners to boost the competitiveness of goods made in the U.S.

The central bank said that it was not part of Taiwan's negotiating team with the U.S. and has never participated in the talks, but reiterated the U.S. Treasury Department has not asked Taiwan to push up the Taiwan dollar.

Echoing the central bank, the Cabinet's Office of Trade Negotiations said in a separate statement that the negotiations with the U.S. have not covered forex exchange issues.

Taiwan and the U.S. held the first in-person meeting on tariffs on May 1 in Washington with the office saying issues discussed included tariffs, non-tariff barriers and other bilateral trade issues and agreed to strengthen economic cooperation to promote mutual benefits and create more business opportunities.

According to the central bank, the increase in Taiwan's trade surplus with the U.S. primarily reflects strong American demand for Taiwan-made information and communications technology products, rather than a weaker exchange rate. In 2024, the U.S. trade deficit with Taiwan rose from US$47.8 billion the previous year to US$73.9 billion.

The central bank said it has never manipulated the Taiwan dollar value and cited the U.S. Treasury's biannual foreign exchange policy reports which have not named Taipei as a currency manipulator in recent years.

Speaking with reporters, Yang Chin-long (楊金龍), governor of the central bank, said the bank stepped in to smooth market volatility, describing the fluctuations as "abnormal."

Yang said he hoped the irregularities will stop now.

Commenting on reports about "U.S. century bonds" -- a proposal floated by Stephen Miran, now chair of the White House Council of Economic Advisers, before he joined the administration, which would ask holders of U.S. Treasuries to exchange them for 100-year bonds -- the central bank said that Miran has since clarified the Trump administration has not adopted the idea as official policy.

According to the central bank, U.S. Treasury Secretary Scott Bessent has also said that Washington has no plan to issue century bonds and seek such a transfer.