Central bank reports 2025 net forex purchases of US$7.69 billion

Taipei, March 28 (CNA) The Central Bank of the Republic of China (Taiwan) bought US$7.69 billion more U.S. dollars than it sold in 2025 on the local foreign exchange market to "smooth currency volatility," according to a report released Friday.

In the report submitted to the Legislative Yuan ahead of a legislative hearing scheduled for Monday, the central bank said the net purchases were equivalent to only 0.8 percent of Taiwan's gross domestic product (GDP) for the year.

The central bank said its intervention level remained in line with guidance set by the U.S. Treasury when it evaluates trading partners for possible currency manipulation.

According to the U.S. Treasury, economies are placed on its currency manipulation list if they meet three criteria during an evaluation period: a trade surplus with the United States exceeding US$15 billion, a current account surplus above 3 percent of GDP, and persistent net foreign currency purchases exceeding 2 percent of GDP in at least eight of 12 months.

In January, Taiwan remained on the Treasury's currency monitoring list of trading partners whose currency practices "merit close attention," after meeting the first two criteria during the four quarters through June 2025.

In the report to lawmakers, the central bank said aggressive net purchases of the U.S. dollar began in May 2025, when the Taiwan dollar strengthened sharply against the greenback, which came under pressure after U.S. President Donald Trump announced "reciprocal" tariff policies in April.

In the first half of the year, the U.S. dollar index, which tracks the greenback against the currencies of Washington's major trading partners, fell 10.7 percent. During the same period, the Taiwan dollar rose 9.63 percent against the U.S. dollar, prompting the central bank to make net purchases totaling US$13.25 billion.

The rapid appreciation of the Taiwan dollar prompted central bank Governor Yang Chin-long (楊金龍) to step in to calm market sentiment, saying at the time that "the disorder (on the forex market) will end now."

Market conditions shifted in the second half of the year. The U.S. dollar index rose 1.49 percent, while the greenback gained 4.89 percent against the Taiwan dollar, the central bank said. At the same time, foreign institutional investors reduced their holdings and moved funds, including cash dividends, out of Taiwan, adding downward pressure on the local currency.

During the July-December period, the central bank sold US$5.56 billion more U.S. dollars than it bought to support the Taiwan dollar, the report showed.

The Taiwan dollar rose 4.27 percent against the U.S. dollar in 2025.

However, the increase was smaller than gains recorded by several other major currencies, including the Swiss franc, which rose 14.48 percent, the euro at 13.44 percent, the Australian dollar at 7.84 percent, and the Singapore dollar at 6.25 percent, indicating the Taiwan dollar remained relatively stable.