Taiwan's forex reserves fall US$8.6 billion in March

Taipei, April 7 (CNA) Taiwan's foreign exchange reserves fell sharply in March as the central bank intervened to stabilize the local currency amid global market volatility.

The Central Bank said reserves totaled US$596.886 billion at the end of March, down US$8.601 billion from February, slipping below the US$600 billion mark. It marked the largest monthly decline since the European debt crisis in 2011.

The drop came as escalating tensions in the Middle East triggered capital outflows and strengthened the U.S. dollar, putting pressure on the Taiwan dollar.

Tsai Chiung-min (蔡炯民), head of the central bank's Foreign Exchange Department, said heavy foreign selling in Taiwan's stock market and large fund outflows contributed to sharp volatility in the foreign exchange market, prompting the central bank to step in.

The Taiwan dollar weakened 2.28 percent against the U.S. dollar in March, marking its steepest monthly decline since October 2022.

Tsai noted that even during recent years of high U.S. interest rates, monthly changes in reserves were not as pronounced. The last comparable decline occurred during the 2011 European debt crisis.

Tsai added that several countries, including Japan, South Korea and India, also reported declines in foreign exchange reserves in March.

Despite the pressure, Tsai said Taiwan's strong current account surplus and exporters holding "ample U.S. dollars" should help support the local currency.

Looking ahead, he said global markets will remain sensitive to geopolitical risks, particularly developments in the Middle East amid the U.S.-Israel war against Iran, and its impact on oil prices.